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 50...
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.
Philip Morris International
Plum Creek Timber
Brookfield Infrastructure Partners
Retail Opportunity Investments
Annaly Preferred D
Investment in SPY (Including Dividends)
Relative Performance (Percentage Points)
Source: Capital IQ, a division of Standard & Poor's.
There has been quite the switch in portfolio performance in the past couple of weeks, and it looks like investors were switching out of dividend stocks. Since then our portfolio is down 1.4 percentage points, but the S&P gained 2 percentage points. That swing leaves us 2.9 points down on the index. That's a marked shift in a short period. The blended yield remains at 4.7%, and we have more than $300 in cash in the portfolio, with $60 more on the way in just a few weeks.
In the next week or two (as Fool's rules permit), I'm going to add $1,000 to each of two new stocks. In addition, I'm going to sell a pair of stocks. Here are the details.
I'm going to add Gramercy Property Trust to the portfolio. It doesn't yet pay a dividend, but it will soon, and it should be substantial. Under new CEO Gordon DuGan, Gramercy has shed its ugly legacy business of collateralized debt obligations and is deploying its hoard of capital into cash-flowing properties. DuGan and his team are finding long-term leases at cap rates greater than 8%. They're getting cheap financing, and the CEO purchased a significant stake when he came on board mid-2012, so he has skin in the game.
I think Gramercy's upside could be 50% over the next year or so. Before the dividend starts on the common stock, though, the company has to become current on its preferred dividend, so I don't expect the common dividend for perhaps a year. But sometimes you have to skate to where a dividend will be rather than where it is. The dividend reinstatement should drive the stock much higher.
In addition, I'll be buying shares of Sprott Resource. This spawn of the Sprott family is a private-equity company led by CEO Kevin Bambrough. It invests in commodities business across the spectrum, including gold, cattle, oil and natural gas, and farmland. It has suffered of late because of its association with gold, which has been hammered in the past couple of months. But gold comprises less than one-fourth of its portfolio. A key value creator at Sprott Resource is bringing companies public, exploiting private-public arbitrage, where public assets are valued more highly than equivalent private assets.
The company aims to pay out 10% of its book value annually. Its dividend is paid monthly and currently comes to $0.035 per share. Bambrough instituted the dividend late last year to move shares higher, and he has been an aggressive buyer of shares at below book value, a move that should create value for shareholders. Now tr