Return On Investment: Ugh!

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In February 2017 and again July 31, 2019, we posted an article regarding what returns should be ascribed to investment assets transferred in equitable distribution.  In 2019, with dividends reinvested the S&P 500 returned just over 33%.  This year-to-date, 8.5%, which is still not bad, but it has also been a wild ride.  In 2019, we wrote about a 10-year Treasury yielding a lousy 2.06%.  Today 0.83%.

So last July, we played off an article appearing in Kiplinger’s Magazine that set forth 11 stocks that were described as “Boring but Beautiful” because they had an average dividend yield of 5.3%.

A bit more than a year later, we thought it provident to revisit these stocks, if for no other purpose than to see what happened with the yields. Obviously, a full exploration would look at price but we wanted to test the question of whether the 5.3% yield was sustainable. On the whole the results were encouraging. The same portfolio of stocks is today producing an average of 6.48%.  Only three of the eleven stocks saw a decline in yield while one company, Macquarie (MIC), ballooned from 9.6% to 14.39%.  One company fell of out bed on the yield side.  Albemarle went from 7% to 1.6%, but when we did look at stock price, it rose from $75/share to $97/share, a consolation for the dividend loss.

Meanwhile, the Freddie Mac House Price Index has risen from 194 to 205 in the past year.  A decade ago, it was at 126.  So, while houses really did not get back their Fall 2006 mojo until 2016, they have been back on the rise and now are adding value to investor portfolia.

In a word, if you have investments, people are making money and it’s a lot more than the 1% the Treasury Department is paying or the staggering 0.05% rate my saving bank offers.  At those rates your savings doubles once every millennium.

Here’s the dividend yield chart from last July as updated last week.

July 2019                              October 2020                     Trade Symbol

Crown Castle 3.5 2.92 CCI
ATT 5.9 7.8 T
Altria 6.4 8.89 MO
CVS 3.6 3.4 CVS
Macquarie 9.6 14.39 MIC
Enterprise 5.9 6.42 EPD
3M 3.3 3.45 MMM
Iron Mountain 8.2 9.02 IRM
Realty Inc. 3.9 4.73 O
Vereit 6.0 4.7 VER
Albermarle 7.0 1.6 ALB

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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