Wednesday, January 18, 2023

Historical Returns for the S&P 400 Midcap Index (Updated Through 2022)

The S&P 400 Midcap Index was introduced in June 1991 and is the most widely-followed U.S. Midcap stock market index.  I have previously posted charts with annual returns through 2007, 2008, 2009, 2010, 2011, 2012, and 2014. The charts below show calendar-year returns between 1992 and 2022 (click on the charts for a larger view).  The charts below also show 5-year annualized returns, starting with the fifth full calendar year of the existence of the S&P 400 Midcap Index (i.e., 1996), as well annualized returns for 10-, 15-, 20-, and 25-year periods of time.  The returns shown below account for reinvestment of all dividends paid by index components. 

As shown below, the S&P 400 Midcap Index dropped about -13.06% in 2014.  Although it was a negative return, this index outperformed the vast majority of the major U.S. stock market indexes, including the Nasdaq-100, which dropped 32.38% and the S&P 500, which dropped 18.11%.  The total return of the Index between December 31, 1991 and December 30, 2022 (the last trading day of 2022), was about 2,524%, an annualized return of about 11.12%.  The 5-year annualized return through 2022 was about 6.71%, the 10-year annualized return was about 10.78%, the 15-year annualized return were about 8.87%, the 20-year annualized return was about 10.66%, and the 25-year annualized return was about 9.79%. 

Any long-term investor should seriously consider investing money in midcap stocks, such as those tracking the S&P 400 Midcap Index (e.g., the Midcap SPDR ETF (symbol: MDY) tracks the S&P 400 Midcap Index). Midcaps tend to provide higher returns over time than large cap stocks, such as those comprising the S&P 500 Index, although such stocks are generally more volatile over shorter time periods.

 


Friday, December 09, 2022

Historical Dividends for Altria (1979-2022)

Altria (ticker symbol: MO) is one of the most popular dividend stocks among dividend growth investors. Altria owns Phillip Morris USA, which sells Marlboro, the most popular cigarette brand in the world in terms of sales.  Altria controls about 48.8% of the cigarette market in the United States and sells various cigarette brands such as Parliament, Virginia Slims, and Basic brands in addition to the Marlboro brand.

Altria was formerly known as Phillip Morris Companies, Inc. prior to a re-branding that occurred in 2003.  Altria has engaged in two corporate spin-offs in recent years.  In 2007 Kraft Foods was spun off from Altria (now know as Kraft Heinz with ticker symbol KHC), and in 2008 Phillip Morris International (ticker symbol: PM) was spun off. 

I last wrote about Altria back in 2012 and am providing my first follow-up on the popular dividend stock since then.  Altria's stock price has struggled since July 2017 when it topped out at about $74/share.  At the time, Altria had a trailing price/earnings (PE) ratio of around 22 or 23 and an annual dividend payout of $2.44/share.  At that price and that dividend payout, Altria's dividend yield was approximately 3.30%.

According to Value Line, Altria is projected to earn approximately $4.85/share for the 2022 calendar year.  Altria closed at $46.71 on December 9, 2022.  Assuming that Altria really does earn $4.85/share, then its current trailing PE is about 9.63, about 56% lower than it was at the stock's peak in July 2017.  Altria currently pays an annual dividend of $3.76/share.  At the most recent closing price for Altria, its dividend yield is about 8.04%, about 143% higher than the dividend yield was in July 2017.

The crazy thing is that even though Altria's earnings per share increased 43% from about $3.39/share in 2017 to a projected $4.85/share in 2022 and the dividend per share increased 54% from $2.44/share to $3.76/share, the share price has decreased about 37% from $74 in July 2017 to $46.71 today.

There are several reasons for Altria's share price decline in the past several years.  One reason was the investment of $13 billion in JUUL in 2018, an investment which may end up being a total loss for Altria.  Altira also invested $1.8 billion in Canadian cannabis company, Cronos, in 2019, an investment which is also almost certainly underwater at the present time.  There has also been a decline in smoking rates among adults in the U.S. from about 20.9% in 2005 to about 12.5% as of 2020. 

Nevertheless, despite a somewhat cloudy and unpredictable future, Altria is still very profitable and is at one of its lowest valuations since the late 1990s.  I personally believe that a decade from now, Altria share price will be significantly higher than it is today and ordinary investors will wonder how this stock ever traded at such a low valuation relative to earnings per share and annual dividend payouts.

The charts shown below (click on each chart for a larger view) show annual dividend payments for Altria between 1979 and 2022.  These charts also show increases in the annual dividend payments over various 5- and 10-year periods of time.  As shown, the 5-year annualized dividend increase has ranged between a low of about 7.70% (for the period ending in 2022) and a high of about 25.36% (for the period ending in 1990).   The 10-year annualized dividend increase has ranged between a low of about 8.03% (for the period ending in 2022) and a high of about 23.12% (for the period ending in 1989). 

 

* Without Kraft Foods included in its results, Altria would have paid a dividend of  $2.88 in 2007.
** Without Phillip Morris International included in its results, Altria would have paid a dividend of $1.22 in 2008., 
*** These charts start with data from the calendar year 1979 because I was unable to locate reliable annual dividend payouts for the years prior to 1979.


Tuesday, July 04, 2017

S&P 500 Dividends (1977-2016)

The chart shown below (click on the chart to see a larger image) annual dividend payouts for the S&P 500 Index between 1977 and 2016. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $45.70 in 2016. This is a total increase of about 879% and an annualized increase of 6.02% in the annual dividend payout. This an impressive annualized increase considering that this time period includes several bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09.  The last two bear markets were particularly bad, as the SP 500 Index lost more than 50% of its value during each. 

As shown, the annual dividend payout amounts increased very rapidly during the late 70s-early 80s likely as a result of inflationary pressures (during the 1970s) and strong economic growth (during the 1980s).  The annual % increase in dividends was also strong between 2003 and 2007, fueled both by strong corporate profits and the dividend tax cut that Congress passed in 2003.  The annual dividend payout of the S&P 500 Index has increased substantially since the end of the Financial Crisis and was about 103.93% higher during 2016 than it was during 2009. 

There will likely be further % increases in the dividend rate in the coming years. Given that investors were burned badly during the 2000-2002 and 2007-08 bear markets , and generally prefer dividend increases over share buybacks.  The Federal Reserve recently announced that all major U.S. banks passed requisite financial stress tests and approved plans to allow those banks to use capital to  allocate extra capital for stock buybacks, dividends and other purposes.  Accordingly, there is a strong likelihood that financial components of the S&P 500 Index will substantially increase dividends in the near future.


Monday, July 03, 2017

Historical Total Returns for the Nasdaq-100 (1986-2016)

The Nasdaq-100 Index is one of the most widely-followed U.S. stock market indexes.  The Nasdaq-100 includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization and is largely comprised of technology and biotech equities. The weightings of companies in the index are based on their respective market capitalizations, with rules capping the influence of the largest components. As of June 29, 2017, the four largest components of the index are Apple (comprising about 11.61% of the index), Microsoft (comprising about 8.23% of the index), Amazon (comprising about 7.15% of the index), and Facebook (comprising about 5.52% of the index).  Google would have been the second largest component (comprising about 9.15% of the index) if it had not been split into two different equities, Goog and Googl, a split which occurred in 2014.

The Nasdaq-100 was initiated on January 31, 1985 and became one of the most widely-followed technology indexes during the dot.com bubble. The chart below (click on the chart for a larger view) illustrates historical annual returns for the Nasdaq-100 index between the calendar years 1986 and 2016.  The Nasdaq-100 Index does not account for dividend payouts, but the Nasdaq-100 Total Return Index, which was initiated on March 4, 1999, does account for dividends.  The chart below calculated based on returns for (a) the Nasdaq-100 Index from January 1, 1986 - March 3, 1999; and (b) the Nasdaq-100 Total Return Index from March 4, 1999 - December 31, 2016. 

As shown below, the Nasdaq-100 recorded its second consecutive relatively mediocre annual return during 2016, rising 7.27%, although the index rose approximately about 338.6% during the calendar years between 2009 and 2016, an annualized return of an impressive 20.30%.  The Nasdaq-100 has rebounded in the first half of 2017, rising approximately 16.78% through the market close on June 30, 2017.

I still believe that the Nasdaq-100 is in the beginning or middle stages of a multi-year secular bull market run as investors reconsider the potential of high tech companies.  The Nasdaq-100 returned a total of about 4025.37% between 1986 and 2016, an annualized return of about 12.75%.  This greatly outperforms the total return of  about 2062.07%, or about 10.42% of the the S&P 500 Index during the same period of time.


Sunday, January 01, 2017

1980 - 2016 Stock Market Returns for Various Indices

The chart shown below (click on the chart for a larger view) illustrates total returns for small cap indices (Russell 2000, Russell 2000 Value, and Russell 2000 Growth), large cap indices (S&P 500, S&P/Citi 500 Value, and S&P/Citi 500 Growth), a broad-based foreign stock index (Morgan Stanley Capital International Index for the developed stock markets of Europe, Australasia, and the Far East ("MSCI EAFE index")), an index of bonds (Barclays Capital Aggregate Bond Index)*, and the Nasdaq Composite Index**.

2016 was a decent year for stock market indices, most of which rebounded from subpar returns during 2015.  Most of the indices dropped during early 2016 and then remained relatively flat until Donald Trump won the 2016 U.S. Presidential election as investors were optimistic about a pro-business Presidential administration and a Republican-controlled Congress.  Tax cuts, a lowered bar for repatriation of foreign retained earnings, reduced business regulations, and a likely repeal of Obamacare sent the markets soaring higher during the last 7 weeks of 2016.

Of the indices shown in the chart below, small caps and value led the way, with the Russell 2000 Value Index rising 31.74%, the Russell 2000 Index rising 21.31%, and the S&P/Citi 500 Value Index rising 17.40%.  Foreign stocks continued their struggles of recent years, with the MSCI EAFE Index experiencing its third consecutive year of subpar returns, rising just 1.0%.  Bonds also under-performed, with the Barclays Capital Aggregate Bond Index rising a mere 2.65%.

As shown in the chart below, the Russell 2000 Value Index provided the strongest returns by far between 1980 and 2016, returning a total of 8,383%, an annualized return of about 12.75% per year. The total return of the Russell 2000 Value Index since December 31, 1979 is more than 2,800% greater than the total return of the next best index tracked below, the S&P 500 Index.


* The Barclays Capital Aggregate Bond Index was known as the Lehman Brothers Aggregate Bond Index prior to 2008.
** The Nasdaq Composite Index returns include annual price increases in the Index for 1980-2009 and total returns (accounting for reinvested distributions) for 2010-2016.  I have not been able to obtain total returns for the Nasdaq Composite for calendar years prior to 2010.

Saturday, February 27, 2016

Historical Total Returns of Altria (MO) from March 1970 - February 2016

Altria Group, Inc. (symbol: MO) is well-known among stock market investors for being one of the greatest long-term wealth-creation vehicles available.  It has provided annualized returns in excess of 20% per year since at least the 1960s.  Historical closing prices and dividend payments for Altria dating back to the early 1970s are available for inspection from Yahoo Finance.

Altria is one of the world's largest tobacco and cigarette corporations and is the parent company of Philip Morris USA, John Middleton, Inc., U.S. Smokeless Tobacco Company, Inc., Philip Morris Capital Corporation, and Chateau Ste. Michelle Wine Estates. Kraft Foods Inc. was spun off to shareholders in 2007 and Philip Morris International was spun off to shareholders in 2008. 

Altria was known as "Philip Morris Companies Inc." prior to 2003.  The company name was changed in an apparent effort to distance the company from the negative perception of tobacco companies at the time. 

Altria is a popular holding among dividend growth investors and, accounting for spin-offs, has raised dividend payments for an impressive 46 consecutive years.  I have previously discussed Altria's historical dividends in a prior post.

The total returns for calendar years 1971-2015 and for partial years (3/31/1970 - 12/31/1970) and for 2016 up through market close on 2/26/2016 are shown in the charts below (click on an image for an enlarged view).  The total returns shown below have been calculated based on an assumption that all dividend payments are automatically reinvested back into additional shares on the date on which each dividend was effectively removed from the stock price (e.g., on the ex-dividend date).

As shown below, the total returns for Altria have been absolutely phenomenal.  The total return between market closes on March 31, 1970 and on February 26, 2016 was about 505,704%!  Assuming no transaction costs, a $1000 investment into MO at the market closing price on March 31, 1970 would now be worth about $5,075,045.  That is an annualized return of approximately 20.4% over a nearly 46-year period of time. 



As shown in the charts above, Altria has increased in value for almost every year tracked.  Notable down years included those during the steep 1973-74 bear market, the 2008 financial crisis, as well as several years during the 1990s when there were fears that the U.S. government would completely ban the sale of tobacco products. 1999 was a particularly bad year as investor sentiment sourced in the wake of the Tobacco Master Settlement Agreement, pursuant to which Altria and other major tobacco companies agreed to pay $206 billion to 46 U.S. states to settle Medicaid lawsuits.  The Agreement also required the tobacco companies to end certain marketing practices.

The Tobacco Master Settlement Agreement did not put Altria out of business.  Instead, Altria emerged even stronger than ever and now controls over 50% of the U.S. market for cigarettes and smokeless tobacco.   Altria's total return between the market closes on December 31, 1999 and on February 26, 2016 has been approximately 2,668%, or an annualized return of about 22.8%.

Altria has been a fantastic performer in the stock market since at least the early 1970s and should continue to be so well into the future.  There have been government bans on tobacco television and radio advertising since 1971 and on billboard and via certain other marketing practices since the Tobacco Master Settlement Agreement.  The advertising bans have results in decreased public consumption of tobacco products.  However, the bans have also effectively created enormous barriers to entry in the U.S. tobacco market, giving Altria huge pricing power which should help the company continue to record consistent earnings growth long into the foreseeable future. 

Friday, January 08, 2016

Historical Annual Returns for the S&P 500 Index - Updated Through 2015

2015 was a mediocre year for the U.S. stock market indexes as a strong U.S. Dollar hurt earnings of multi-nationals.  The entire market also wavered under the prospects of a Federal Reserve interest rate hike and China's devaluation of its currency in August.   The total return of the S&P 500 Index was just 1.38%. 

As I have previously mentioned, Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957.  The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2015.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2015 was about 10.02%.  The 5-year annualized return through the end of 2015 was about 12.57%.  The 10-year annualized return through 2015 was about 7.30%.

According to the Wall Street Journal, as of January 8, 2015, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 15.75. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has been around 16 based on data dating back to the 1800s, so the S&P 500 Index appears to be slightly undervalued relative to its historical average P/E ratio.





Sunday, February 22, 2015

Historical Returns for the S&P 400 Midcap Index (Updated Through 2014)

The S&P 400 Midcap Index was introduced in June 1991 and is the most widely-followed U.S. Midcap stock market index.  I have previously posted charts with annual returns through 2007, 2008, 2009, 2010, 2011, and 2012. The chart below shows calendar-year returns between 1992 and 2014 (click on the chart for a larger view).  The chart below also shows five-year annualized returns, starting with the fifth full calendar year of the existence of the S&P 400 Midcap Index (i.e., 1996),  ten-year annualized returns, and fifteen-year annualized returns.

As shown below, the S&P 400 Midcap Index returned about 9.77% in 2014, which was a decent return, albeit much smaller than the massive 33.50% return during 2013.  The annualized return of the Index from 1992-2014 was about 12.09%, the 5-year annualized return through 2014 was about 16.54%, the 10-year annualized return through 2014 were about 9.71%, and the 15-year annualized return were about 9.65%. The total return (including reinvested dividends) between December 31, 1991 and December 31, 2014 was about 1,281.70%.

I recommend that any long-term investor seriously consider investing money in midcap stocks, such as those tracking the S&P 400 Midcap Index (e.g., the Midcap SPDR ETF (symbol: MDY) tracks the S&P 400 Midcap Index). Midcaps tend to provide higher returns over time than large cap stocks, such as those comprising the S&P 500 Index, although such stocks are generally more volatile over shorter time periods.

 ** I have posted an updated chart for the period between 1992-2022.

Sunday, February 01, 2015

S&P 500 Dividends (1977-2014)

The chart shown below (click on the chart to see a larger image) illustrates annual dividend payouts for the S&P 500 Index between 1977 and 2014. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $39.44 in 2013. This is a total increase of about 744% and an annualized increase of 5.94% in the dividend yield. This a solid annualized increase considering that this time period includes several bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09.  During the last two bear markets, the SP 500 Index lost more than 50% of its value. 

As shown, the annual dividend payout amounts increased very rapidly during the late 70s-early 80s likely as a result of inflationary pressures (during the 1970s) and strong economic growth (during the 1980s).  The annual % increase in dividends was also strong between 2003 and 2007, fueled both by strong corporate profits and the dividend tax cut that Congress passed in 2003.  The annual dividend payout of the S&P 500 Index increased by double digits during each of the past four years and was about 73.59% higher in 2014 than it was in 2010. 

I continue to anticipate further % increases in the dividend rate in the coming years. Investors were burned badly during the 2000-2002 and 2007-08 bear markets and currently appear to prefer dividend increases over share buybacks. Moreover, as a result of the recent bouts of increased volatility, dividend-paying stocks are viewed favorably by investors who like receiving periodic dividend payments.


***An updated version of this chart containing data from 1977-2016 may be found in this post.

Saturday, January 10, 2015

Historical Annual Returns for the S&P 500 Index - Updated Through 2014

2014 was another solid year for most U.S. stock market indexes, particularly for indexes of large cap stocks, such as the S&P 500 Index.   The S&P 500 Index experienced a total return of about 13.69%.   The market was largely driven higher as a result of  improving economic conditions in the United States, the Federal Reserve's continued QE3 U.S. Dollar pumping, and a strengthening U.S. Dollar.

Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957.  The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2014.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2014 was about 10.12%.  The 5-year annualized return through the end of 2014 was about 15.45%.  The 10-year annualized return through 2014 was about 7.67%, the highest 10-year annualized return since 2006.

According to the Wall Street Journal, as of January 9, 2014, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 16.75. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has been around 16 based on data dating back to the 1800s, so the S&P 500 Index appears to be reasonably valued relative to its historical average P/E ratio.





I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2015.

Friday, January 09, 2015

Historical Returns for the Nasdaq-100 (1986-2014)

The Nasdaq-100 Index is one of the most widely-followed indexes of primarily technology and biotech stocks.  The Nasdaq-100 includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization. The weightings of companies in the index are based on their market capitalizations, with rules capping the influence of the largest components. As of January 8, 2015, the three largest components of the index are Apple (comprising about 13.59% of the index), Microsoft (comprises about 8.33% of the index), and Intel (comprises 3.67% of the index).  Google would have been the third largest component if it had not been split into two different equities, Goog and Googl, a split which occurred on August 19, 2014.

The Nasdaq-100 was initiated on January 31, 1985 and, as I have previously discussed, has since become one of the most widely-followed technology indexes during the dot.com bubble. The chart below (click on the chart for a larger view) illustrates historical annual returns for the Nasdaq-100 index between the calendar years 1986 and 2014.  The Nasdaq-100 Index does not account for dividend payouts, but the Nasdaq-100 Total Return Index, which was initiated on March 4, 1999, does account for dividends.  The chart below calculated based on returns for (a) the Nasdaq-100 Index from January 1, 1986 - March 3, 1999; and (b) the Nasdaq-100 Total Return Index from March 4, 1999 - December 31, 2014.

As shown below, the Nasdaq-100 recorded a solid year in 2014, rising 19.40%, and has risen some about 272.5% during the calendar years between 2009 and 2013, an annualized return of about 24.5%!  

I still believe that the Nasdaq-100 is in the beginning stages of a multi-year secular bull market run as investors reconsider the potential of high tech companies.  The Nasdaq-100 returned a total of about 3403.97% between 1986 and 2014, an annualized return of about 13.05%.  This greatly outperforms the total return of  about 1804.75%, or about 10.70% of the the S&P 500 Index during the same period of time. 


* I have posted updated returns for the Nasdaq-100 through 2016 in another post.

Sunday, August 31, 2014

Historical Returns for the Nasdaq-100 (1986-2013)

The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization. It is a modified capitalization-weighted index. The weightings of companies in the index are based on their market capitalizations, with rules capping the influence of the largest components. As of August 29, 2014, the three largest components of the index are Apple (comprising about 13.55% of the index), Microsoft (comprises about 8.23% of the index), and Google (comprises about 4.23% of the index).

The Nasdaq-100 was initiated on January 31, 1985 and has since become one of the most widely-followed technology indexes during the dot.com bubble. The chart below (click on the chart for a larger view) illustrates historical annual returns for the Nasdaq-100 index between the calendar years 1986 and 2013.  The Nasdaq-100 Index does not account for dividend payouts, but the Nasdaq 100 Total Return Index, which was initiated on March 4, 1999, does account for dividends.  The chart below calculated based on returns for (a) the Nasdaq-100 Index from January 1, 1986 - March 3, 1999; and (b) the Nasdaq-100 Total Return Index from March 4, 1999 - December 31, 2013.

As shown below, the Nasdaq-100 soared 36.92% during 2013, its second-highest return of the past 10 calendar years.  The Nasdaq-100 rose about 212% during the calendar years between 2009 and 2013, an annualized return of an impressive 25.55%.  

I have previously stated that I believe that the Nasdaq-100 is in the beginning stages of a multi-year bull market run as investors reconsider the potential of high tech companies.  The Nasdaq-100 returned a total of about 2834.56% between 1986 and 2013, an annualized return of about 12.83%.  This greatly outperforms the total return of  about 1575.41%, or about 10.59% of the the S&P 500 Index during the same period of time. 


* I have posted updated returns for the Nasdaq-100 through 2016 in another post.

Friday, February 21, 2014

S&P 500 Dividends (1977-2013)

The chart shown below (click on the chart to see a larger image)  illustrates annual dividend payouts for the S&P 500 Index between 1977 and 2013. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $34.99 in 2013. This is a total increase of about 649% and an annualized increase of 5.75% in the dividend yield. This an impressive annualized increase considering that this time period includes several sharp bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09.  During the last two bear markets, the S&P 500 Index lost more than 50% of its value. 

As shown, the annual dividend payout amounts increased very rapidly during the late 70s-early 80s likely as a result of inflationary pressures (during the 1970s) and strong economic growth (during the 1980s).  The annual % increase in dividends was also strong between 2003 and 2007, fueled both by strong corporate profits and the dividend tax cut that Congress passed in 2003.  Dividend payouts, however, plummeted over 21% in 2008 during the 2008 bear market and financial crisis and only recovered to hit a new all-time high in 2012.  The annual dividend payout of the S&P 500 Index increased by double digits during each of the past three years and was about 53.9% higher in 2013 than it was in 2010. 

I still anticipate further % increases in the dividend rate in the coming years. Investors were burned badly during the 2000-2002 and 2007-08 bear markets and currently appear to prefer dividend increases over share buybacks. However, the % increase may be smaller in future years, given the dividend tax increases that the Obama administration pushed through Congress in 2012.


***An updated version of this chart containing data from 1977-2016 may be found in this post.

Saturday, February 08, 2014

Historical Annual Returns for the S&P 500 Index - Updated Through 2013

2013 was a huge year for across the board for practically all equities with the notable exception of Emerging Markets.  The S&P 500 Index, one of the most widely-followed U.S. equity indexes, had a total return of about 32.39%, its largest calendar year return since 1997 and the 13th largest calendar year return of the 88 calendar year returns shown in the charts below.   The market was largely driven higher as a result of  slight improved economic growth as well as well as the Federal Reserve's continued QE3 U.S. Dollar pumping

Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957.  The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2013.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2013 was about 10.08%.  The 5-year annualized return through the end of 2013 was about 17.94%, one of the best 5-year annualized returns shown on the charts below.  The 10-year annualized return through 2013 was about 7.40%, the highest 10-year annualized return since 2006.

According to the Wall Street Journal, as of February 7, 2014, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 15.10. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has been around 16 based on data dating back to the 1800s, so the S&P 500 Index may be slightly undervalued relative to its historical average P/E ratio.  As of February 7, 2014 the total return of the S&P 500 Index (including reinvested dividends) is about -2.59% as a result of recent stock market mini-correction.






I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2015.

Tuesday, January 21, 2014

Historical Returns for the MSCI Emerging Markets Index (1988-2013)

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is the preeminent emerging markets equity index. I have previously discussed annual returns of the index during the 1989-2008, 1989-2009, 1988-2010, 1988-2011, and 1988-2012 time periods.

The chart below (click on the chart for a larger view) shows annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2013. The returns shown below represent net dividend reinvested returns. The 2013 total return for the MSCI EM Index was -2.60%, lagging considerably behind most other major stock indexes

During the 26 years for which I have data (i.e., 1988-2013), the MSCI EM Index lost value during 11 calendar years and gained value in 15 other calendar years. The worst returns came during 2008 when the Index plummeted 53.33% during the financial crisis and the best annual gains came during 2009 when the Index soared 78.51%. As I have previously discussed, the best extended stretch of strong returns occurred between 2003 and 2007 during which the index gained an impressive 382.96%, an annualized gain of approximately 37.02%.

The annualized returns were 14.79% for the 5-year period, 11.17% for the 10-year period, 10.91% for the 15-year period, and 7.32% for the 20-year period ending in 2013. Annualized returns between 1988 and 2013 were about 11.94% and the Index had a total new return of 1,776% between 1988 and 2013. The performance of the MSCI EM Index between 1988 and 2013 greatly exceeds the 10.50% annualized return and 1,242% total return of the S&P 500 Index during the same time period.

Emerging Markets are typically critical portion of an investment portfolio of any stock market investor with a long-term investment strategy.  Investment advisers typically recommend limiting Emerging Markets to no more than 10-15% of an aggressive investor's portfolio.  Although Emerging Markets have lagged significantly behind other major indexes in recent years, I expect the trend to reverse at some point in the near future.