In trading on Monday, shares of Ford Motor were yielding above the 5% mark based on its quarterly dividend (annualized to $0.6), with the stock changing hands as low as $11.98 on the day. Dividends play a crucial role for investors as they have historically contributed significantly to the stock market's total return.
For instance, let's consider the scenario of purchasing shares of the S&P 500 ETF (SPY) on 12/31/1999 at $146.88 per share. By 12/31/2012, the value per share had decreased to $142.41, resulting in a loss of $4.67 per share. However, during the same period, dividends totaling $25.98 per share were collected, leading to a positive total return of 23.36%. Even with dividends reinvested, the average annual total return was approximately 1.6%. Therefore, a yield exceeding 5% can be deemed attractive if sustainable.
