Diamondback Energy’s Dividends Attract Investors Amid Market Fluctuations

On Thursday, shares of Diamondback Energy, Inc. (Symbol: FANG) yielded over 2% due to its quarterly dividend, which amounts to an annualized total of $3.6. On this trading day, the stock price dipped to as low as $179.41. For investors, dividends hold significant weight, as they often make up a large portion of overall stock market returns. To illustrate this point, consider the S&P 500 ETF (SPY), purchased at $146.88 per share on December 31, 1999. By December 31, 2012, its value had dropped to $142.41—a decrease of $4.67. However, during this period, investors received $25.98 in dividends per share, leading to a total positive return of 23.36%. Even with dividends reinvested, this only reflects an annual total return of approximately 1.6%. Therefore, a dividend yield surpassing 2% becomes notably appealing for investors, assuming it can be sustained. Diamondback Energy, as an S&P 500 company, holds a unique position among major players within the index.

Dividends can be unpredictable and closely linked to a company’s profitability. In this context, reviewing the historical dividend data for Diamondback Energy can assist in determining whether its recent dividend is likely to persist, and if the expectation of a 2% annual yield is realistic.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.