Understanding the Significance of Dividend Yields
Delving into the realm of stocks under scrutiny at Dividend Channel, the trading scene on Wednesday witnessed Ford Motor Co. (Symbol: F) showcasing a yield surpassing the 5% threshold, based on its quarterly dividend of $0.6 annualized. The stock meandered as low as $11.95 during the day’s transactions. Dividends hold a particular allure for investors due to their substantial historic contribution to the overall stock market returns.
Consider this scenario – imagine acquiring shares of the S&P 500 ETF (SPY) by the end of 1999 at $146.88 per share. Fast forward to December 31, 2012, and the value per share was $142.41, indicating a decrease of $4.67 per share over the years. However, amidst this, you would have amassed a staggering $25.98 per share in dividends across the same timeline, translating to a positive total return of 23.36%. Even with dividends reinvested, the average annual return modestly stands at about 1.6%. In comparison, a yield exceeding 5% seems notably appealing, provided the continuity of such a yield.
Assessing Historical Context
Enumerating the historical dividend trends alongside the profitability fluctuations of individual companies is crucial. Examining the historical chart below on Ford Motor Co. can offer insights into the viability of sustaining the current dividend, indicating the reasonableness of anticipating a 5% annual yield.
Additional Insights:
Louis Bacon Stock Picks
LiveOne Historical PE Ratio
Top Ten Hedge Funds Holding APLM