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The Southern Company (SO), Vodafone Group Plc (ADR) (VOD), and The World’s Best Dividend Portfolio

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.

The Southern Company (NYSE:SO)

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
The Southern Company (NYSE:SO) $39.71 25.0818 4.2% $1,184.61 18.9%
Exelon $41.36 28.818 3.6% $1,000.56 (16%)
National Grid $48.90 20.3693 5.7% $1,211.36 21.6%
Philip Morris International Inc. (NYSE:PM) $68.49 14.5429 3.6% $1,374.74 38%
Ryman Hospitality $44.93 24.7 4.6% $1,086.06 (2.1%)
Plum Creek Timber $38.42 26 3.3% $1,341.60 34.3%
Brookfield Infrastructure Partners $26.12 38.2825 4.6% $1,448.99 44.9%
Vodafone Group Plc (ADR) (NASDAQ:VOD) $26.75 56.7566 5.3% $1,598.83 5.3%
Seaspan $15.24 95 6.6% $1,900.00 31.3%
AT&T Inc. (NYSE:T) $35.20 28.4 4.8% $1,076.64 7.7%
Retail Opportunity Investments $12.20 81.95 4.3% $1,148.12 14.8%
Annaly Preferred C $25.98 38.5 7.4% $990.99 (0.7%)
Cash $291.53
Dividends Receivable $24.71
Original Investment $12,983.97
Total Portfolio $15,678.76 20.8%
Investment in SPY (Including Dividends) 19.6%
Relative Performance (Percentage Points) 1.2

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

The portfolio continued to perform strongly, despite the gyrating markets. We now stand at a 20.8% gain, and we’re leading the S&P benchmark by 1.2 percentage points — up 0.3 percentage points since the last report. 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 4.9%, and we have nearly $300 in cash in the portfolio, with almost $25 more on the way in the next 10 days.

Things looked cheery for Vodafone Group Plc (ADR) (NASDAQ:VOD) earlier this week, as it was rumored from “usually reliable sources” that AT&T and Verizon Communications Inc. (NYSE:VZ) were tag-teaming for a bid on the U.K.-based telecom. But Verizon busted those rumors later, saying that it was not “currently” looking at a deal for Vodafone in whole or in part.

I’m pretty skeptical of Verizon Communications Inc. (NYSE:VZ)’s dismissal, especially with the use of the word “currently.” We know the telecom has been sniffing around Vodafone for a while, and with its wireline business generating little profit, the company needs Verizon Wireless if it wants to pay its dividend from cash flow and not go increasingly into debt. Vodafone Group Plc (ADR) (NASDAQ:VOD), on the other hand, is in a different boat, since it has paid out its regular dividend for years without disbursements from Verizon Wireless. A deal will happen sooner or later — the only question is how favorable it will be to Vodafone Group Plc (ADR) (NASDAQ:VOD) shareholders. The rumored deal price would put Vodafone Group Plc (ADR) (NASDAQ:VOD)’s shares near $40. The prospect of a buyout is also why my Special Situations portfolio acquired options in Vodafone.

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