Published Fri, 23 Mar 2012 18:00:28 EDT on The Motley Fool
Last June, I invested my money equally in a selection of 10 high-yield dividend stocks. Those names offer triple the yield of the average S&P 500 stock. You can read all the details for yourself. Now let's check out the results so far.
Company Cost Basis Shares Yield Total Value Return
Southern $39.71 25.0818 4.3% $1,105.35 11%
Exelon $41.82 23.818 5.4% $1,123.61 (5.7%)
National Grid $48.90 20.3693 5.8% $1,030.89 3.5%
Philip Morris International $68.49 14.5429 3.6% $1,262.91 26.8%
Annaly Capital (NYSE: NLY) $18.24 65.5 14% $1,059.79 (9.7%)
Frontier Communications (NYSE: FTR) $7.88 126.4243 9.2% $539.83 (45.8%)
Plum Creek Timber $38.42 26 4.1% $1,075.36 7.7%
Brookfield Infrastructure Partners (NYSE: BIP) $26.12 38.2825 5% $1,166.85 16.7%
Vodafone $26.52 37.5566 4.9% $1,041.63 4.6%
Seaspan $14.61 69 4.1% $1,197.15 18.8%
Dividends Receivable $27.00
Original Investment $9,986.58
Total Portfolio $10,684.18 7%
Investment in SPY (Including Dividends) 9.9%
Relative Performance (Percentage Points) (2.9)
Our total portfolio performance since inception is 7%, down about 70 basis points since last week, and maintaining the same underperformance of 2.9% behind the dividend-adjusted S&P. We have seven of 10 stocks in positive territory. Despite the underperformance, we're still achieving a much larger yield than the S&P, which should help ballast the portfolio when times get tough.
We'd been waiting on one big dividend announcement for the first quarter, and now we have it: Annaly Capital announced a payout of $0.55, down from $0.57 in the fourth quarter. That follows similar moves from peers American Capital Agency (Nasdaq: AGNC) and Armour Residential (NYSE: ARR) , which cut their dividends this quarter, too. Armour moved its monthly dividend down 10%, to $0.10, while American Capital cut its longtime $1.40 quarterly payout to $1.25. I think investors should be cautious on these names in the near future, even with low interest rates a near-certainty through 2014, as the Federal Reserve tries to stoke the economy.
As for portfolio composition, I continue to like Philip Morris and Brookfield Infrastructure for their all-weather performance. They simply keep pushing out growing dividend streams year after year and have defensible businesses in consumer goods and infrastructure, respectively. So over time I expect them to continue to climb higher.
Dividends and other announcements
We're through earnings season, and we have limited dividend news for the moment.
Frontier is one of the most shorted stocks on the market, with nearly 18% of shares short. But one fund has recently been buying shares in the beleaguered telecom. Avenir loaded up on Frontier, according to its latest 13-F filing. The investment manager has beaten the S&P by more than 20 percentage points since mid-2007.
Brookfield Infrastructure went ex-dividend on Feb. 27 and pays out $0.375 per share on March 30. Frontier went ex-dividend on March 9 and pays out $0.10 per share on March 30. Annaly goes ex-dividend on March 28 and pays out $0.55 per share on April 26. All that, of course, means more money coming into our pockets.
It's fun to sit back and get paid, and with the market's volatility, we might have a good chance to reinvest those dividends at good prices. Europe continues to be an absolute mess, and continued bad news will probably have stocks plunging again, and if they do, I'll be inclined to pick more shares up.
Foolish bottom line
I've been a fan of big dividends for a while, and I think this portfolio will outperform the market over time through the power of dividends. As I promised in the original article, I'll be holding these stocks for at least a year and will continue to track the portfolio over the course of that year, including news on these companies.... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|ARMOUR RESIDENTIAL REIT||22.46||0.0||-9.85||2.64||11.87|
|AMERICAN CAPITAL AGENCY||19.48||0.0||-2.90||2.16||11.12|
|ANNALY CAPITAL MANAGEMENT||10.08||0.0||-1.27||1.06||10.45|
|BROOKFIELD INFRASTRUCTURE PARTNERS LP||34.30||38.4||0.89||1.57||4.59|
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