Income-seeking financiers love dividend stocks, much of which have attractive yields when compared to bond yields. They may like them even more when they understand how payouts in time have boosted their portfolios.
The data below shows examples of companies with dividend yields that might have seemed modest five years back, today provide high levels of earnings to financiers who have actually stayed loyal for five years.
The very best Buy example
To illustrate this, imagine you bought shares of Best Buy Co. BBY, +1.17% 5 years back and you chose not to reinvest your dividends. You paid $33.48 a share for Finest Purchase on April 27, 2016. At that time, the business was paying a quarterly dividend of 23 cents a share for a yield of 2.75%.
Fast-forward to April 27, 2021, and shares of Best Buy closed at $118.35 for a five-year gain of 253%. Which’s a gain, not an overall return, because in this example you have not reinvested dividends. On the other hand, the quarterly dividend had increased to 70 cents a share, making for a yield of 2.37%, based upon the most current closing cost.
But your dividend yield, based on what you spent for your shares in 2016, would be a fat 8.36%.
And this sort of performance might be more common than you recognize.
Greatest dividend yields on shares purchased five years earlier
If we start with the S&P 500 SPX, +0.34% and get rid of any company that does not pay a dividend now, didn’t pay one 5 years ago or wasn’t part of the index 5 years ago, we are entrusted to 356 companies. If we restrict the list to companies whose share prices (adjusted for divides) have at least folded the previous 5 years, we are down to 139.
Amongst those staying 139 companies, here are the 20 with the greatest existing dividend payments relative to the rates you would have paid if you had bought them five years ago.
So that is the second-right-most column on the table, “Dividend yield on shares held for five years.” There is a lot of data here, so you will have to scroll the table to see it all:
Keep in mind: Gains are not overall returns, since the table presumes dividends weren’t reinvested.
Notable examples include Lam Research study Corp. LRCX, -0.35 %, which makes equipment used in semiconductor production. The stock has risen almost eightfold over the previous 5 years. And if you had held the stock for five years, the existing dividend would produce a yield of 6.42% based on what you had paid for them back in April 2016. That’s a fine example of development and earnings.
Another innovation company has an uncommon set of information for this group. Seagate Technology PLC STX, -0.51% had an extremely high dividend yield of 9.22% 5 years earlier– the stock was clobbered throughout 2015. However if you had purchased the stock on April 27, 2016, your five-year gain would be 245% and the dividend yield based upon what you spent for the shares would be 9.80%.
Shares of Texas Instruments Inc. TXN, +1.50% have increased 217% over 5 years. If you had bought the shares at the start of that run, your dividend yield based upon the present payout and the cost you spent for the stock would be 6.81%.
Likewise of note are bank stocks, which lots of financiers find boring:.
If you had actually bought shares of Morgan Stanley MS, +0.27% five years earlier, your stock would have nearly tripled, and your dividend yield, based on what you spent for the shares, would be 5.09%.
5 years back, your stock would have nearly tripled, and your dividend yield, based upon what you paid for the shares, would be 5.09%. For JPMorgan Chase & Co. JPM, +1.04 %, your gain would be 170% and your dividend yield, based on what you spent for the stock five years back, would be 5.62%.
your gain would be 170% and your dividend yield, based on what you spent for the stock 5 years back, would be 5.62%. Shares of Regions Financial Corp. RF, +1.59% have actually increased 121% over the previous 5 years. If you had actually purchased them 5 years ago, your dividend yield based upon the cost you paid for the shares would be 6.47%.
have actually risen 121% over the previous five years. If you had actually purchased them 5 years earlier, your dividend yield based on the rate you paid for the shares would be 6.47%. For 5th 3rd Bancorp FITB, +1.75%, your five-year gain would be 110% and the dividend yield based on what you paid for the stock would be 5.77%.
your five-year gain would be 110% and the dividend yield based upon what you paid for the stock would be 5.77%. Lastly, shares of PNC Financial Provider Group Inc. PNC, +1.66% are up 106% for five years. If you held the stock that long, your dividend yield based upon the price you paid would be 5.17%.
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