| Company | Cost Basis | Shares | Yield | Total Value | Return |
|---|---|---|---|---|---|
| Southern | $39.71 | 25.0818 | 4.3% | $1,137.96 | 14.3% |
| Exelon | $41.36 | 28.818 | 6.5% | $936.01 | (21.5%) |
| National Grid | $48.90 | 20.3693 | 5.7% | $1,139.87 | 14.4% |
| Philip Morris International Inc. (NYSE:PM) | $68.49 | 14.5429 | 3.8% | $1,327.91 | 33.3% |
| Ryman Hospitality | $44.93 | 24.7 | 4.4% | $1,131.26 | 1.9% |
| Plum Creek Timber | $38.42 | 26 | 3.4% | $1,296.88 | 29.8% |
| Brookfield Infrastructure Partners | $26.12 | 38.2825 | 4.6% | $1,470.05 | 47% |
| Vodafone Group Plc (ADR) (NASDAQ:VOD) | $26.75 | 56.7566 | 5.6% | $1,577.83 | 3.9% |
| Seaspan | $15.24 | 95 | 6.5% | $1,904.75 | 31.6% |
| AT&T | $35.20 | 28.4 | 4.9% | $1,046.82 | 4.7% |
| Retail Opportunity Investments | $12.20 | 81.95 | 4.6% | $1,080.10 | 8% |
| Annaly Preferred C | $25.98 | 38.5 | 7.5% | $980.21 | (1.8%) |
| Cash | $231.79 | ||||
| Dividends Receivable | $59.74 | ||||
| Original Investment | $12,983.97 | ||||
| Total Portfolio | $15,321.19 | 18% | |||
| Investment in SPY (Including Dividends) | 20.2% | ||||
| Relative Performance (Percentage Points) | (2.2) |
Source: Capital IQ, a division of Standard & Poor’s.
The portfolio is up 18% since we began this experiment, and we’re trailing the S&P by 2.2 percentage points. We lost about 0.5 percentage points on the S&P from last week as the index raced out to a 2.2 percentage point lead. That’s what we expect — slight underperformance in a rising market and outperformance in poor markets. So far this year, the S&P has been on fire, but that won’t continue forever. We have a load of cash in our pocket and more on the way, plus after a couple of buys and sells, the portfolio yields a very healthy 5.2%.
As I discussed last week, I sold the stake in Frontier Communications Corp (NASDAQ:FTR) for $4.13 per share and rolled those funds into Vodafone at $27.19. Frontier Communications Corp (NASDAQ:FTR) continues to experience shrinking free cash flow, and while the dividend should be covered amply for 2013, cash flow just continues to shrivel. In contrast, Vodafone owns a very attractive asset in its 45% stake in Verizon (NYSE:VZ) Wireless and has survived Verizon Communications Inc. (NYSE:VZ)‘s attempt to force Vodafone out of its stake. The market is pricing Vodafone at only a little above what its stake could fetch from Verizon, and there’s a lot of speculation that this might finally be the year that Verizon, because of dwindling cash flow and the need to cover its own dividend, will make a bid on the wireless unit. But one fund manager thinks Vodafone would be insane to sell out. Stay tuned.
In addition, I sold my stake in Annaly Capital Management, Inc. (NYSE:NLY) for $15.32 per share and rolled those funds into a new stake in Ryman Hospitality Properties at $44.93. Ryman is very attractively placed and should do well over the coming year. It yields 4.4% now — well above its lodging peers — yet is valued below most of them. It owns some of the best convention hotels in the U.S. and is well positioned. I strongly encourage you to read my details on the company here.
Unfortunately, I wasn’t able to switch my stake in Annaly Capital (NYSE:NLY) Series to Annaly Capital (NYSE:NLY) Series D, since the spread closed too quickly. I’ll keep an eye on those two and switch the stake when a $0.40 differential looks possible. While the dividend on Annaly Capital (NYSE:NLY)’s common stock continues to crumble, all those dividends would have to be wiped out before dividends on the preferreds would be cut.
Philip Morris has a new CEO, and its former COO, Andre Calantzopoulos, who’s taking the reins at the world’s largest tobacco company. He takes over for Louis Camilleri, who remains chairman but cedes the CEO role. Calantzopoulos has worked for the company since 1985, and I expect there to be no transition issues.
Dividends and earnings announcements
Here is the recent news on earnings and dividends:
Dividend news:
Frontier went ex-dividend on March 6 and pays out $0.10 per share on March 28.
Brookfield Infrastructure went ex-dividend on Feb. 26 and pays out $0.43 per share on March 29.
Annaly Capital (NYSE:NLY) Series C went ex-dividend on Feb. 27 and pays out almost $0.48 per share on April 1.
ROIC went ex-dividend on March 13 and pays out almost $0.15 per share on March 29.
All that, of course, means more money coming into our pockets.
It’s fun to sit back and get paid, and with the market 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. 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 continue to track and report on the portfolio’s progress, including news on these companies.
The article The World’s Best Dividend Portfolio originally appeared on Fool.com and is written by Jim Royal.
Jim Royal, Ph.D., owns shares of the 12 portfolio stocks mentioned in the table. The Motley Fool recommends Brookfield Infrastructure Partners, Exelon, National Grid, Retail Opportunity Investments, Seaspan, Southern, and Vodafone and owns shares of Annaly Capital Management, Brookfield Infrastructure Partners, Philip Morris International, Retail Opportunity Investments, and Seaspan.
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