High-Yield Dividend Portfolio Will Beat the Market

There's a hot debate going on at The Motley Fool, and Fools are putting real money where their mouths are. We have been debating which is better: high-yield stocks or high dividend-growth stocks (nerds!). My colleague Jeremy Phillips has gone so far as to invest $10,000 in his Outstanding Dividend Portfolio, saying, "I believe dividend growth, much more than current yield, is critical to a successful dividend portfolio." I'm on the other side with our senior retail analyst Jim Royal and firmly believe high yield beats high growth.

I'm so convinced that I'm also going to put real money behind my conviction. On Feb. 21, I'll be investing $10,000 of my retirement portfolio into 10 high-yield stocks and promise not to sell them for a full year. Today, I'll tell you why I believe in high-yield dividends and give you my 10 stock picks. Evidence compiled by Tweedy Browne shows that portfolios of high-yield dividend stocks outperform lower yielding portfolios and the market in general. In fact, a study by noted finance professor Jeremy Siegel found that over 45 years, the highest yielding 20% of S&P 500 stocks outperformed the S&P 500 by three times! The highest-yielding stocks turned a $1,000 investment in 1957 into $462,750 by 2002, compared with $130,768 if the same money was invested in the index.

Source: Motley Fool

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