| 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.
