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 | 4.1% | $1,194.40 | 19.9% |
| Exelon | $41.36 | 28.818 | 3.6% | $1,042.64 | (12.5%) |
| National Grid (NYSE:NGG) | $48.90 | 20.3693 | 5.7% | $1,231.94 | 23.7% |
| Philip Morris International (NYSE:PM) | $68.49 | 14.5429 | 3.6% | $1,390.30 | 39.6% |
| Ryman Hospitality | $44.93 | 24.7 | 4.4% | $1,102.61 | (0.6%) |
| Plum Creek Timber | $38.42 | 26 | 3.2% | $1,348.88 | 35% |
| Brookfield Infrastructure Partners | $26.12 | 38.2825 | 4.5% | $1,463.16 | 46.3% |
| Vodafone | $26.75 | 56.7566 | 5.3% | $1,661.27 | 9.4% |
| Seaspan | $15.24 | 95 | 6.2% | $2,003.55 | 38.4% |
| AT&T | $35.20 | 28.4 | 4.7% | $1,094.54 | 9.5% |
| Retail Opportunity Investments | $12.20 | 81.95 | 4.3% | $1,140.33 | 14.1% |
| Annaly Preferred D | $25.98 | 38.9 | 7.4% | $989.62 | (0.2%) |
| Cash | $317.59 | ||||
| Dividends Receivable | $12.78 | ||||
| Original Investment | $12,983.97 | ||||
| Total Portfolio | $15,993.59 | 23.2% | |||
| Investment in SPY (Including Dividends) | 22.1% | ||||
| Relative Performance (Percentage Points) | 1.1 |
Source: Capital IQ, a division of Standard & Poor’s.
The portfolio continued to perform strongly, up 2.4% on the week, bringing the cumulative gain to 23.2%. We slid just a bit against the S&P, which gained 2.5% since our last report. So right now we’re 1.1 percentage points ahead. As I noted last week, when our portfolio outperforms for a while, I usually take it as a sign that the markets are getting a bit more cautious and deciding to move to dividend stocks, which are traditionally seen as safer.
The blended yield is still a robust 4.8%, and we have more than $300 in cash in the portfolio, with more on the way in the next 10 days.
As I mentioned a few weeks ago, I intended to switch my Annaly Capital Management, Inc. (NYSE:NLY) Series C preferreds for Series D, which were trading cheaper and on much the same term, and I did that within the Fool’s trading rules earlier this week. If the Series D goes $0.30-$0.40 higher than the C, I’ll consider switching back. The preferred stocks will go ex-dividend at the end of next month. I continue to like the Annaly Capital Management, Inc. (NYSE:NLY) preferreds for their good yield and backing by one of the best players in the mortgage REIT space.
If you need a reason to avoid America’s big tobacco companies Altria Group Inc (NYSE:MO) and Reynolds American, Inc. (NYSE:RAI), the recently proposed budget by President Obama might just be enough. The new budget proposes nearly doubling the federal tax rate from $1.01 to $1.95 per pack.
Increasing regulations and taxes are part of what spurred Altria Group Inc (NYSE:MO) to spin off Philip Morris five years ago, and it appears to have been the right move. But even Philip Morris is coming under increasing pressure from countries such as Russia and Australia. Still, if you want exposure to tobacco, Philip Morris offers a huge play on the world’s developing economies and may even steal shareholders from former parent Altria Group Inc (NYSE:MO) and its rival Reynolds American, Inc. (NYSE:RAI), as American taxes and regulations become more restrictive. Fellow Fool Sean Williams has more on what the plan means for tobacco companies in this article.
National Grid announced its new dividend policy for the next eight years, and it looks OK, though not spectacular. From 2014, the company is targeting dividend growth at least at the rate of U.K. inflation, which had been running at 3.2% recently. That compares with the company’s recent policy of 4% growth. The new policy is intended to keep the company’s credit rating intact, which is important, since the CEO said that any capex will be sourced from retained earnings and debt, not equity. However, it was just a few years ago that National Grid spooked investors by promising much the same and then issuing stock. How will the new dividend policy fare? Fellow Fool Maynard Paton has more in this article.
