In trading on Friday, shares of Pfizer were yielding above the 6% mark based on its quarterly dividend (annualized to $1.68), with the stock changing hands as low as $27.85 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, if one had purchased shares of the S&P 500 ETF (SPY) on 12/31/1999 at $146.88 per share, by 12/31/2012, the value had decreased to $142.41 per share. However, dividends totaling $25.98 per share were collected during that period, resulting in a positive total return of 23.36%. Even with dividends reinvested, the average annual total return was approximately 1.6%. Therefore, a yield above 6% can be seen as attractive if sustainable.
