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Philip Morris International Inc. (PM), Ryman Hospitality Properties, Inc. (REIT) (RHP): The World’s Best Dividend Portfolio

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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
Exelon $41.36 28.818 4% $893.36 (25%)
National Grid plc (ADR) (NYSE:NGG) $48.90 20.3693 5.5% $1,155.75 16%
Philip Morris International Inc. (NYSE:PM) $78.05 25.5429 3.9% $2,235.26 12.1%
Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) $40.96 39.3 5.3% $1,494.19 (7.2%)
Plum Creek Timber $38.42 26 3.8% $1,210.82 21.2%
Brookfield Infrastructure Partners $26.12 38.2825 4.8% $1,386.21 38.6%
Vodafone Group Plc (ADR) (NASDAQ:VOD) $27.26 74 5.5% $2,124.54 5.3%
Seaspan $15.24 95 6.4% $1,939.89 34%
Retail Opportunity Investments $12.20 81.95 4.3% $1,127.63 12.8%
Annaly Capital Management, Inc. (NYSE:NLY) Preferred D $25.50 38.9 7.6% $959.27 (3.3%)
Gramercy Property Trust $4.48 223 0% $992.35 (0.7%)
Cash $526.22
Dividends Receivable $158.57
Original Investment $13,983.01
Total Portfolio $16,204.06 15.9%
Investment in SPY (Including Dividends) 21.7%
Relative Performance (Percentage Points) 5.8

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

There has been quite the switch in portfolio performance in the past couple weeks, and it appears that investors were switching out of dividend stocks. The total portfolio is now up 15.9%. That’s down from recent weeks for a couple reasons — first, just because of adding new money to the portfolio that hasn’t had time to work. Second and the bigger reason, investors really have shifted out of dividend stocks for the moment, but we’ve found some great deals in Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP) and Gramercy.

So that all leads us to underperformance on the S&P of 5.8 percentage points. Someday, investors will get over their short-term dislike for dividend stocks, and we’ll narrow the gap. The blended yield is 4.8%.

Philip Morris International Inc. (NYSE:PM)The news that the Federal Reserve might slow quantitative easing seems to have spooked the market, especially for dividend stocks. The reasoning is that as interest rates rise, investors will switch out of dividend stocks and into bonds. Am I worried? Not at all. The historical evidence on dividend stocks suggests that they outperform over time. So why worry about some short-termers who trade out of them as interest rates might rise? Let’s remember all the fear that attended the tax-rate increase on dividends at the end of last year. That led to some decent buying opportunities for people who were thinking longer-term. So now is not the time to panic.

As I mentioned before, I’ve added $1,000 in shares of Gramercy to the portfolio. While it doesn’t pay a dividend now, I expect one in the near future and for shares to appreciate meaningfully.

I haven’t yet added $1,000 in new money to Sprott Resource, but I’ll look to do that in the next week. Sprott has really been hit hard as gold prices have plummeted, though less than 25% of its assets are actually gold. In fact, more than 50% are in energy, which I expect to do well as the economy improves.

With more than $500 in cash in the account now, I’m tempted to buy more Ryman Hospitality Properties, Inc. (REIT) (NYSE:RHP), which is quite cheap for a quality franchise. On the last conference call, management was talking about taking on some debt to buy back shares — a very shareholder-focused move. I hope they pursue this avenue further.

We finally got word on dividends from our two U.K. companies. National Grid plc (ADR) (NYSE:NGG) will pay out about $2.09 per share on Aug. 21, while Vodafone Group Plc (ADR) (NASDAQ:VOD) distributes about $1.05 per share on Aug. 7. Those dividends contribute meaningfully to the nearly $160 in payouts that are owed to the portfolio.

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