Delving into Dividends
Investors’ eyes were drawn to Schlumberger Ltd (Symbol: SLB) as its shares crossed the coveted 2% yield threshold on a trading Tuesday. With the quarterly dividend equating to $1.1 annualized, the stock dipped to $53.17, capturing the attention of those with a keen eye for lucrative opportunities. Dividends, the lifeblood of stock returns, have historically been the unsung heroes of the market landscape.
The Power of Dividends
Consider this: Imagine embarking on a stock journey by purchasing shares of the S&P 500 ETF (SPY) way back on 12/31/1999, each share setting you back $146.88. Skip ahead to 12/31/2012, and the value dwindled to $142.41, a decline of $4.67 per share. However, a silver lining emerges in the form of dividends, showering you with $25.98 per share during the same period. Ta-da! A positive total return of 23.36% graces your investment, even with reinvested dividends beckoning at an average annual total return of a modest 1.6%. A yield surpassing 2% suddenly seems like the pot of gold at the end of the rainbow, promising a bountiful harvest if sustainable. Schlumberger Ltd (Symbol: SLB), a distinguished member of the S&P 500 clan, basks in the limelight as a large-cap stalwart donning the S&P 500 Index badge.
Unveiling Dividend Predictability
The ebbs and flows of dividends often trace the profitability rollercoaster experienced by companies. For Schlumberger Ltd, a glance at the historical chart below aids in discerning the likelihood of the current dividend’s continuity. It serves as a crystal ball, offering a glimpse into the future possibility of a 2% annual yield.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
