Understanding the Importance of Dividends for Investors
In trading on Tuesday, shares of Huntington Bancshares Inc (Symbol: HBAN) yielded over 4% based on its quarterly dividend, which is annualized to $0.62. The stock was trading as low as $15.49 on that day. Dividends play a crucial role for investors because they have historically contributed significantly to the overall returns from the stock market.
To illustrate, if you had purchased shares of the S&P 500 ETF (SPY) on December 31, 1999, at $146.88 per share, you would have seen its value decline to $142.41 by December 31, 2012—a drop of $4.67. However, during that same period, you would have received $25.98 per share in dividends, resulting in a positive total return of 23.36%. Although reinvesting those dividends would yield an average annual total return of about 1.6%, a sustainable yield above 4%, like HBAN’s, stands out as particularly attractive.
Huntington Bancshares Inc is categorized as an S&P 500 company, which adds to its appeal as part of this index of large-cap firms.
While dividends are important, they are not always predictable and generally fluctuate with the profitability of each company. By reviewing the dividend history chart for HBAN, investors can assess whether the most recent dividend is likely to continue, thus determining the feasibility of expecting a 4% annual yield.
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Also see:
• Best Cheap Dividend Stocks
• ED Dividend History
• Top Ten Hedge Funds Holding EVA
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
