Income-seeking investors love dividend stocks, many of which have attractive returns compared to bond yields. They may like them even more when they realize how payments over time have strengthened their portfolios. The data below shows examples of companies with dividend yields that may have seemed modest five years ago, but now provide high levels of income to investors who have been loyal for five years.
The Best Buy Example To illustrate this, imagine that you bought shares of Best Buy Co. ABY, -0.98% five years ago, and decided not to reinvest your dividends. He paid $ 33.48 per Best Buy share on April 27, 2016. At the time, the company was paying a quarterly dividend of 23 cents per share for a 2.75% yield. Fast forward to April 27, 2021 and Best Buy stock closed at $ 118.35 for a five-year gain of 253%. And that’s a profit, not a total return, because in this example you haven’t reinvested the dividends. Meanwhile, the quarterly dividend had risen to 70 cents a share, yielding a 2.37% return, based on the most recent closing price. But your dividend yield, based on what you paid for your shares in 2016, would be a whopping 8.36%. And this type of performance might be more common than you imagine. Highest Dividend Yields on Stocks Purchased Five Years Ago If we start with the S&P 500 SPX, -0.08% and eliminate any companies that don’t pay dividends now, right? paying one five years ago or it was not part of the index five years ago, we have 356 companies left. If we narrow the list to companies whose stock prices (adjusted for divisions) have doubled at least over the past five years, we are at 139. Among the remaining 139 companies, here are the 20 with the highest current dividend payments. prices you would have paid if you had bought them five years ago. That’s the second most right column in the table, “Dividend Yield on Shares Held for Five Years.” There is a lot of data here, so you will have to scroll through the table to see it all: Note: Earnings are not total returns, because the table assumes that dividends were not reinvested. Technology stocks Notable examples include Lam Research Corp. LRCX, -1.06%, which manufactures equipment used in semiconductor manufacturing. The stock has multiplied by almost eight in the last five years. And if you had owned the shares for five years, the current dividend would yield a 6.42% return based on what you paid for them in April 2016. That’s a good example of growth and income. Another tech company has an unusual data set for this group. Seagate Technology PLC STX, + 1.03% had a very high dividend yield of 9.22% five years ago; the shares were crushed during 2015. But if you had bought the shares on April 27, 2016, your five-year profit 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, -4.41% have risen 217% in five years. If you had bought the stock at the beginning of that run, your dividend yield based on the current payment and the price you paid for the stock would be 6.81%. Bank Stocks Bank stocks are also notable, which many investors find boring: If only there were You bought Morgan Stanley MS shares, + 0.94% five years ago, your shares would have nearly tripled and your dividend yield, based on what you paid for the shares, would be 5.09%. For JPMorgan Chase & Co. JPM, + 0.65%, your profit would be 170% and your dividend yield, based on what you paid for the shares five years ago, would be 5.62%. Regions Financial Corp. RF shares, + 0.85%, have risen 121% over the last five years. If you had bought them five years ago, your dividend yield based on the price you paid for the shares would be 6.47%. For Fifth Third Bancorp FITB, + 1.40%, your five-year profit would be 110% and the dividend yield based on what you paid for the shares would be 5.77%. Finally, the shares of PNC Financial Services Group Inc. PNC, + 0.92% have risen 106% for five years. If you held the stock for that long, your dividend yield based on the price you paid would be 5.17%. Don’t Miss: Should You Buy Nvidia Stock? Here are the key numbers to watch now