Income-seeking financiers like dividend stocks, much of which have attractive yields when compared to bond yields. They may like them even more when they realize how payments over time have intensified their portfolios.
The information listed below shows examples of business with dividend yields that may have appeared modest five years earlier, and now offer high levels of earnings to financiers who have actually stayed loyal for five years.
The Best Buy example
To show this, envision you acquired shares of Best Buy Co. BBY, +0.94% 5 years back and you chose not to reinvest your dividends. You paid $33.48 a share for Best 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 Purchase closed at $118.35 for a five-year gain of 253%. Which’s a gain, not a total return, because in this example you haven’t reinvested dividends. On the other hand, the quarterly dividend had actually increased to 70 cents a share, making for a yield of 2.37%, based on the most recent closing rate.
However 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 realize.
Highest dividend yields on shares purchased five years earlier
If we begin with the S&P 500 SPX, +0.68% and eliminate any company that doesn’t pay a dividend now, didn’t pay one five years ago or wasn’t part of the index five years earlier, we are entrusted 356 business. If we restrict the list to business whose share costs (changed for splits) have at least doubled over the past 5 years, we are down to 139.
Amongst those staying 139 business, here are the 20 with the highest existing dividend payments relative to the rates you would have paid if you had acquired them five years back.
So that is the second-right-most column on the table, “Dividend yield on shares held for 5 years.” There is a lot of data here, so you will need to scroll the table to see it all:
Keep in mind: Gains are not total returns, since the table assumes dividends weren’t reinvested.
Significant examples consist of Lam Research Corp. LRCX, +0.46 %, which makes equipment used in semiconductor production. The stock has risen almost eightfold over the past 5 years. And if you had held the stock for 5 years, the present dividend would make for a yield of 6.42% based on what you had actually paid for them back in April 2016. That’s a great example of development and earnings.
Another technology business has an uncommon set of data for this group. Seagate Innovation PLC STX, +1.71% had a really high dividend yield of 9.22% 5 years ago– the stock was clobbered throughout 2015. But if you had bought the stock on April 27, 2016, your five-year gain would be 245% and the dividend yield based on what you paid for the shares would be 9.80%.
Shares of Texas Instruments Inc. TXN, +2.20% have actually increased 217% over 5 years. If you had bought the shares at the start of that run, your dividend yield based upon the current payout and the price you paid for the stock would be 6.81%.
Likewise of note are bank stocks, which many financiers find boring:.
If you had actually bought shares of Morgan Stanley MS, +1.53% five years ago, your stock would have nearly tripled, and your dividend yield, based upon what you spent for the shares, would be 5.09%.
5 years ago, your stock would have nearly tripled, and your dividend yield, based on what you spent for the shares, would be 5.09%. For JPMorgan Chase & Co. JPM, +1.94 %, your gain would be 170% and your dividend yield, based upon what you spent for the stock five years back, would be 5.62%.
your gain would be 170% and your dividend yield, based upon what you paid for the stock five years earlier, would be 5.62%. Shares of Regions Financial Corp. RF, +2.52% have actually risen 121% over the past 5 years. If you had actually bought them five years back, your dividend yield based upon the price you spent for the shares would be 6.47%.
have actually increased 121% over the previous 5 years. If you had bought them 5 years earlier, your dividend yield based on the cost you spent for the shares would be 6.47%. For Fifth 3rd Bancorp FITB, +2.29%, your five-year gain would be 110% and the dividend yield based upon what you spent 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%. Finally, shares of PNC Financial Provider Group Inc. PNC, +2.11% are up 106% for five years. If you held the stock that long, your dividend yield based on the cost you paid would be 5.17%.
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