If you’re an income investor, it’s important to track how much your stock dividends are growing over time in your portfolio. Stock price movements matter little if you have no intention of ever selling the stock. As long as dividend payments continue unabated, the purpose of your investment is still sound, and you can continue holding the stocks through good times and bad.
Sometimes it’s helpful to look back over a longer time frame to see how much you’ve made in dividends over that period and perhaps compare the current dividend and yield with the amount and yield received at the time of purchase. This helps to assess whether that investment was worthwhile.
Take a look at one popular real estate investment trust (REIT) over the past five years and what it’s generating today compared to November 2017.
Realty Income Corp. O calls itself “the monthly dividend company” and prides itself on having raised its dividend 117 times since its initial public offering (IPO) in 1994. Realty Income is one of 65 members of the S&P 500 Dividend Aristocrats index. This means it has increased its dividends for at least 25 consecutive years, which is no small feat.
San Diego-based Realty Income is a retail REIT with over 11,400 properties around the world in a net-lease, long-term portfolio. Its U.S. tenants include large and well-established companies such as Walgreens Co., Dollar General Corp., FedEx Corp. and Dollar Tree Inc.
Among income investors, Realty Income is one of the most popular and closely followed REIT stocks. The monthly dividend it provides helps income investors pay regularly occurring bills, and the surety and safety of the dividend year after year only add to its appeal.
If you had invested $1,000 in Realty Income five years ago, you would have bought 18.78 shares at a price of $53.22. The monthly dividend was approximately $0.205. Over those years, you would have collected $13.57 in dividends, for a total of $254.84. The appreciation would have been $8.99, so your total return over five years between appreciation and dividends would be 42.4%. Your investment would now be worth approximately $1,424.
If you didn’t need to take the income immediately and had instead reinvested shares, you would now have 23.37 shares for a total five-year return, between appreciation and dividends, of 45.41%. Your investment would now be worth $1,454.
At the time of your purchase, the annual dividend of Realty Income was $2.46, for a yield of 4.62%. Today, the monthly dividend is $0.2483, with the annual dividend being $2.98, so the yield on the shares you bought five years ago would have grown to 5.59%.
This shows the value of holding on to quality dividend stocks over time as company dividends are raised. For Realty Income investors, the returns have been quite profitable.
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