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The World’s Best Dividend Portfolio

Wednesday - 4/24/2013, 12:28am  ET

In June 2011, I invested my money equally in a selection of 10 high-yield dividend stocks. With a year of success behind me, in July 2012, I added even more money to the portfolio. Those names offer triple the yield of the average S&P 500 stock. You can read all the details here. Now let's check out the results so far.

Company

Cost Basis

Shares

Yield

Total Value

Return

Southern

$39.71

25.0818

4.2%

$1,215.71

22.1%

Exelon

$41.36

28.818

3.6%

$1,056.76

(11.3%)

National Grid

$48.90

20.3693

5.7%

$1,230.51

23.5%

Philip Morris International

$68.49

14.5429

3.7%

$1,349.87

35.5%

Ryman Hospitality

$44.93

24.7

4.7%

$1,063.58

(4.2%)

Plum Creek Timber

$38.42

26

3.2%

$1,365.26

36.7%

Brookfield Infrastructure Partners

$26.12

38.2825

4.6%

$1,439.04

43.9%

Vodafone

$26.75

56.7566

5.3%

$1,687.94

11.2%

Seaspan

$15.24

95

6.5%

$1,925.65

33%

AT&T

$35.20

28.4

4.7%

$1,099.93

10%

Retail Opportunity Investments

$12.20

81.95

4.2%

$1,165.33

16.6%

Annaly Preferred D

$25.98

38.9

7.4%

$992.34

0%

Cash

     

$317.59

 

Dividends Receivable

     

$12.78

 

Original Investment

     

$12,983.97

 

Total Portfolio

     

$15,922.30

22.6%

Investment in SPY

(including dividends)

       

19.8%

Relative Performance

(percentage points)

       

2.8

Source: Capital IQ, a division of Standard & Poor's.

The portfolio continued to perform strongly, though on relative terms. While it was down 0.6 percentage points since the last article, to 22.6% gains, the outperformance on the S&P grew, from 1.1 points to 2.8. That's strong performance for a week, but it suggests that investors are moving to "safe" dividend-paying assets. That flight to safety may ultimately presage a market move lower, but we'll see. In any case, it suggests that investors are getting more cautious and shun riskier assets. But as I've said all along, I expect we'll outperform in down markets, and we continue to see that.

The blended yield is 4.9%, and we have more than $300 in cash in the portfolio, with more on the way in the next 10 days. I've been holding more cash than I normally would expecting a market downturn after the runaway start to the markets this year.

We're coming up on the two-year anniversary of the portfolio in June, and I'm planning to add more money and perhaps more positions. In addition, I may shake things up a little bit and sell some stocks from the portfolio. Have any good dividend stocks to buy or ones from the portfolio to sell? Let me know in the comment box below.

I continue to follow the rumors around Vodafone with quite a bit of interest. I think the deal will happen sooner rather than later because Verizon needs the cash flow from Verizon Wireless, its joint venture with Vodafone. In the last four quarters, Wireless net income comprised 90% of Verizon's bottom line, and you'll recall that Verizon doesn't get that Wireless cash unless it makes dividends to itself -- and Vodafone. At the very least, I expect to see the Wireless dividend spigot turned on regularly, and that means a lot more cash coming Vodafone's way--  cash that could be used for buybacks and more dividends.

But things still look ripe for a buyout of at least Vodafone's 45% interest in Wireless. As Verizon's CFO revealed on a conference call, the company is "extremely confident that such a transaction could be accomplished in a manner that is very tax efficient and would not result in a tax on the gain in that stake." That would mean little or no tax leakage for Vodafone. So while it's researching ways to make a tax-efficient deal, Verizon is not "currently" making a deal for Vodafone in whole or in part. Ri-i-i-i-ght.

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