5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline
By: Ned Piplovic,
While down amidst the current market decline, some dividend stocks still were able to maintain a total return of more than 10% over the past 12 months and currently offer dividend yields in excess of 5%.
These dividend yields certainly received a boost from falling share prices as the dividend yield is the ratio of an equity’s total annual dividend payout amount and the current share price. With the share price in the denominator of that ratio, a price reduction increases the overall value of the ratio — the dividend yield.
A share price decline can offset all dividend income and deliver total losses even for some of the highest dividend stocks, like the five examples listed below. However, investors have an easy way to check whether equities with declining share prices still deliver positive gains. If the total return over the trailing 12-month period is higher than the forward dividend yield, the asset appreciation is still positive. Thus, the equity is delivering returns.
The share prices of smaller companies might be susceptible to higher degrees of volatility and encounter stronger headwinds while recovering after an overall market decline. However, the five companies on the list below have large enough market capitalizations — more than $5 billion — and should have an easier time recovering from the current share price pullback.
In addition to their size and still positive one-year returns, all the companies below have boosted their annual dividend payout for at least four consecutive years. Back tested market performance data indicates that companies with strong records of consecutive annual dividend hikes tend to outperform equities with flat dividend payouts or no dividend distributions at all.
With market capitalizations between $5.26 billion on the low end of the range and $247.61 billion at the top, the average capitalization of the five companies on this list is nearly $80 billion. Current dividend yields range from 5.51% to nearly 7.1%, and the unweighted average for all five equities exceeds 6%. Even with the share prices declining in value over the past several weeks amid the coronavirus outbreak, these equities managed to combine their one-year capital gains with their income distributions to deliver total returns between 11.6% and 21% over just the trailing 12 months.
5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline: #5
Medical Properties Trust, Inc. (NYSE:MPW)
Based in Birmingham, Alabama, and founded in 2003, Medical Properties Trust, Inc. focuses exclusively on providing capital to acute health and medical care facilities through long-term leases of multiple facility types.
This real estate investment trust (REIT) increased its quarterly dividend payout for its upcoming pay date in early April from $0.26 in the previous period to $0.27. This new quarterly distribution is equivalent to a $1.08 annualized dividend and yields 5.51%. While still above the industry average, the current yield is driven by robust asset appreciation below this REIT’s own five-year average of 6.53%.
Since resuming annual dividend hikes in 2014, the trust has enhanced its annual dividend payout amount by 35%, which is equivalent to an average annual growth rate of 4.4% over the past seven years. This combination of asset appreciation and rising dividends has delivered a total return of more than 11.6% over the past year.
A share price decline of more than 30% in 2015 limited the five-year total return to approximately 70%. However, the share price has been rising steadily since 2006, and shareholders have enjoyed a total return on their investment of more than 85% over the last three years.
5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline: #4
AbbVie, Inc. (NYSE:ABBV)
Headquartered in North Chicago, Illinois, and founded when Abbott Labs (NYSE:ABT) divested its proprietary pharmaceutical business in 2013, AbbVie Inc. discovers, develops, manufactures and sells pharmaceutical products.
The company’s current $1.18 quarterly dividend is 10.3% higher than the $1.07 payout from the last period of 2019. This new quarterly payout corresponds to a $4.72 annualized distribution and a 5.56% forward dividend yield, which is 41% higher than the 3.93% five-year average yield.
Continuing a multi-decade streak of annual dividend boosts, AbbVie has hiked its dividend payout every year since divesting from Abbott Labs six years ago. During this period, AbbVie tripled its total annual payout amount, which is equivalent to an average annual growth rate of nearly 17%.
As of the market’s close on March 11, 2020, the share price still maintained a 4% gain over the trailing 12 months. This asset appreciation has combined with ABBV’s high-yield dividend for a total one-year return of nearly 16%. Additionally, AbbVie delivered a 47% total return over the last three years. Lastly, its shareholders’ total gains have pulled back from nearly double a few weeks ago to approximately 80% over the last five years.
5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline: #3
Gaming & Leisure Properties, Inc. (NASDAQ:GLPI)
Headquarters in Wyomissing, Pennsylvania, and incorporated in 2013, Gaming and Leisure Properties, Inc. (GLPI) is a self-administered and self-managed Pennsylvania REIT. The company became the first gaming-focused REIT in North America when it elected to be treated as an REIT for U.S. federal income tax purposes for the 2014 tax year. Gaming and Leisure Properties focuses primarily on acquiring, financing and owning real property for leasing to gaming operators in “triple net” lease arrangements. The company’s current portfolio comprises 46 gaming and related facilities, which are geographically diversified across 16 states.
This might be the riskiest of the five equities on this list. If “social distancing” continues after the current coronavirus is under control, the entertainment and gaming companies — which lease facilities from GLPI — might not recover as quickly as other market sectors.
Gaming & Leisure Properties’ most recent boost increased the company’s quarterly dividend almost 3% from the previous period’s $0.68 payout to a $0.70 amount for the upcoming distribution later this month. This new quarterly payout amount corresponds to a $2.80 annualized dividend distribution and a 7.08% forward dividend yield, which is the highest yield among the equities on this list.
As of the market’s close on March 11, 2020, GLPI’s share price still held on to a one-year gain of a few percentage points, which combined with the stock’s dividend income for a 16.3% total return over the trailing 12-month period. Furthermore, over the last three years, shareholders have enjoyed a total return of 57%.
5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline: #2
TFS Financial Corporation (NASDAQ:TFSL)
A subsidiary of the Third Federal Savings and Loan Association of Cleveland, MHC, the TFS Financial Corporation offers retail consumer banking services primarily in Ohio and Florida. While it paid its first dividend in 2008, the company suspended its payouts in the aftermath of the financial crisis. However, since resuming dividend distributions in mid-2014 after a four-year pause, the company has hiked its annual dividend payout for the past five consecutive years.
The current dividend hike for the upcoming payout in late March 2020, the company raised its quarterly payout from $0.26 to $0.27. This new dividend payout amount is equivalent to a $1.12 annualized dividend distribution and currently yields 5.96%. The current yield is nearly 47% higher than the company’s own 4.06% average dividend yield over the past five years.
Additionally, the share price has been rose steadily from 2017 through 2019 to deliver double-digit-percentage total returns. Even with the current pullback, the share price has held a 13% one-year gain as of the market’s close on March 11, 2020. The current total return over the trailing 12 months — including dividend income payouts — is still more than 19%. Total returns exceed 27% and 54% over the past three and five consecutive years, respectively.
5 Dividend Stocks with 10%-Plus One-Year Total Return Despite Market Decline: #1
AT&T, Inc. (NYSE:T)
Based in Dallas, Texas, AT&T, Inc. was founded in 1983 as the Southwestern Bell Corporation, which was one of the Regional Bell Operating Companies that was created by the regulatory breakup of the AT&T monopoly. The company provides communications and digital entertainment services through four business segments — Business Solutions, Consumer Mobility, Entertainment Group and International.
AT&T boosted its quarterly dividend from $0.51 to $0.52 for its most recent payout in February 2020. This new distribution amount is equivalent to a $2.08 annualized amount and a 6.03% forward dividend yield, which is 10% higher than the company’s own 5.48% average yield over the past five years.
As of the market’s close on March 11, 2020, AT&T’s share price was up more than 12% over the past year. This asset appreciation was able to combine with the stock’s dividend distributions for a total one-year return of 21%. A significant share price pullback delivered losses over the past three years, but the five-year total return exceeds 36%.
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