Saturday, November 24, 2012

Historical Dividends for Altria (1979-2012)

Altria (ticker symbol: MO) is one of the most well-known corporations in the world.  Altria owns Phillip Morris USA, which sells Marlboro, the most popular cigarette brand in the world in terms of sales.  Altria controls about 50% 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 (ticker symbol: KRFT) was spun off from Altria and in 2008 Phillip Morris International (ticker symbol: PM)was spun off. 

Altria is a favorite equity holding among investors seeking dividend income.  As of the market close on November 23, 2012, Altria's dividend yield was about 5.26% and the company has historically maintained one of the largest dividend yields among equities in the Standard & Poor's 500 Index.  According to Altria's website, the company's target dividend payout ratio is approximately 80 percent of adjusted earnings per share.  After accounting for stock splits and the spin-offs of Kraft Foods and Phillip Morris International, Altria has increased its dividend payout per share every year since at least 1970.

The cigarette industry is a mature one that has loyal (or addicted) costumers.  State and local governments have raised taxes on cigarettes on a seemingly annual basis, yet the sales of cigarettes and other tobacco products continue to increase annual given the relatively inelastic demand for such tobacco products.

As a result of the maturity of the market, the relatively inelastic demand, and the large target dividend payout ratio of 80% of adjusted earnings per share, Altria has provided an unbelievable total return to stock holders over the years, making many long-term holders multimillionaires.  Between January 1970 and November 2012, Altria's total return (accounting for reinvestment of dividends and the spin-offs of Kraft Foods and Phillip Morris International) was approximately 216,200%, and annualized gain of about 20% per year!  A $10,000 investment in 1970 in Altria would have grown to approximately $21,620,000 by November 2012, an astonishing return over that time period.

Not surprisingly, the growth in Altria's annual dividend payouts has also been incredibly impressive.  The chart below shows the annual dividends for Altria paid between 1979 and the estimate 2012 full year distribution.*  As shown, after accounting for share splits and the spin offs of Kraft Foods and Phillip Morris International, Altria paid a dividend of approximately $0.0521/share in 1979 and the dividend has increased to an estimate $1.70 in 2012.  The annual dividend has therefore increased 10,421% during this time period.  The annual dividend dividend has increased at an annualized rate of over 15% per year since 1979.

The chart shown below (click on the chart for a larger view) also lists increases in the dividend payout over various 5- and 10-year periods of time.  As shown, the 5-year annualized dividend increase has ranged between a low of about 8.03% (for the period ending in 2007) 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 8.42% (for the period ending in 2007) and a high of about 23.12% (for the period ending in 1989).

Altria has been a staple of investors hungry for large and reliable ever-increasing dividend payouts and should continue to be so for years to come.  There have been fears that fewer people would taking up smoking given the effort to educate young people about the dangers of tobacco use and the always-looming treat of lawsuits.  However, Altria has nevertheless continued to provide strong returns in recent years.  Anyone looking for dividend income should consider Altria as well as Phillip Morris International, which may have a brighter future given the projected steady increase in the number of smokers overseas.

* 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., 
*** This chart starts with data from the calendar year 1979 because I was unable to locate reliable annual dividend payouts for the years prior to 1979. 

Friday, September 21, 2012

Historical Returns for the MSCI EM Latin America Index (1988-2011)

As I previously discussed last year, Morgan Stanley Capital International, Inc. ("MSCI") created an index to track the performance of Latin American stocks in the late 1980s. The MSCI Emerging Markets (EM) Latin America Index was instituted with a market closing value of 100.00 as of December 31, 1987. It is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of emerging markets in Latin America. According to the MSCI website, the MSCI EM Latin America Index currently consists of a combination of the following market returns for Brazil, Chile, Colombia, Mexico, and Peru. The Index is dominated by Brazil and the Mexico, the two largest Latin American economies and stock markets.

The chart below (click on the chart for a larger view) shows the annual returns for the MSCI EM Latin America Index between 1988 and 2011 and also indicates 5-, 10-, 15-, and 20- year annualized returns. During 24 full calendar years of its existence, the Index increased in value for 16 years and decreased in value for 8 years. The largest calendar year gains were achieved in 1991 and 2009 when the Index soared 149.66% and 104.19%, respectively. The largest calendar year losses were recorded in 1998 and 2008 when the Index soared 35.11% and 51.28%, respectively.  2011 was a bad year for Emerging Markets equities in general and particularly so for Latin American equities, as the MSCI Latin America Index dropped about 19.15%.

The largest 5-year gain was recorded between 2003 and 2007 when the Index soared 688% for an annualized gain of just over 51% per year during that time period. There were only two 5-year periods during which the Index lost value - those between (a) 1994-1998 when the Index lost 1.74% per annum, and (b) 1998-2002 when the Index lost 7.85% per annum.  During the 5-year period ending in 2011, the Index rose about 6.84% per annum, a respectable return for a period of time that overlaps with the 2008 financial crisis during which the Index dropped over 67% between May 30, 2008 and November 21, 2008.

There are 15 different 10-year periods shown in the chart below and the Index gained value during each of those 10-year periods. The largest 10-year gain occurred between 1988-1997 when the Index gained 1,489%, or 31.87% per annum.

There are 10 different 15-year periods shown in the chart below and the Index gained value during each of those 15-year periods. The largest 15-year gain occurred between 1991-2005 when the Index gained 1,390%, or 19.74% per annum.

There are 5 different 20-year periods shown in the chart below and the Index gained value during each of those 10-year periods. The largest 20-year gain occurred between 1988-2007 when the Index gained 8,229%, or 24.75% per annum.

Unfortunately there is no ETF currently available that tracks the MSCI EM Latin America Index. As I previously stated, the closest proxy that I have been able to locate is the iShares S&P Latin America 40 Index ETF (symbol: ILF), which tracks an index of stocks trading on the exchanges of four Latin American countries - Mexico, Brazil, Argentina, and Chile.

Latin American stocks are historically volatile, but they can provide quite a kick to investment returns during a bull market. Someone holding an ETF tracking Latin American stocks may want to consider consider periodically rebalancing the position to (a) lock in capital gains after years during which those stocks have soared, or (b) increase a position after a year during which the Index dropped in value.

*** I have updated this chart to include returns for 2013 in another post.

Tuesday, September 11, 2012

S&P 500 Dividends (1988-2011)

The chart shown below (click on the chart to see a larger image) illustrates dividend information for the S&P 500 Index from 1988-2011. As shown, the dividends paid by the S&P 500 component companies increased from $9.73 in 1988 to $26.43 in 2011. That works out to a total increase of 171.63% and an average annual increase of 4.440% in the dividend yield. This is relatively impressive annual increase considering that this time period includes the terrible bear markets during (a) 2000 to 2002; and (b) 2008, during each of which the S&P 500 lost about 50% of its value.

As shown in the chart below, the annual % increase of dividends increased very rapidly between 2003 and 2007, fueled both by strong corporate profits over the past few years and the dividend tax cut that Congress passed in 2003.  The dividends plummeted over 21% in 2008 during the 2008 bear market and financial crisis and has since nearly recovered to the 2007 high.

I anticipate further % increases in the dividend rate in the coming years. Investors were burned badly during the 2000-2002 and 2008 bear markets and currently seem to prefer dividend increases over share buybacks.

***An updated version of this chart containing data from 1977-2014 may be found in this post.

Sunday, August 26, 2012

Historical Returns for the Nasdaq-100 (1986-2011)

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 24, 2012, the largest component of the index is Apple (symbol: AAPL), which comprises about 19.64% of the index.

The Nasdaq-100 was initiated on January 31, 1985. The Nasdaq-100 grew into one of the most widely-followed technology indexes during the 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 2011.*

As shown, the Nasdaq-100 rocketed higher during the 1990s, rising about 1849% between 1991 and 1999, an annualized gain of about 38.28%. Between 1986 and 1999, the Nasdaq-100 rose about 2702%, an annualized gain of about 26.88%. However, between 2000 and 2008 the Nasdaq-100 was one of the worst-performing U.S. stock indexes, dropping about 68.32%, an annualized loss of about 11.69%.

The Nasdaq-100 rocketed during the late-1990s as investors piled into technology stocks regardless of valuations. As of January 1999, the price/earnings (P/E) ratio of the Nasdaq-100 index was reportedly about 90.2 and topped well over 100 by the end of 1999 as the Nasdaq-100 rose over 101% during the year. After the dot-com bubble burst, the Nasdaq-100 plummeted about from a peak closing value of about 4704.72 on March 27, 2000 to its bear market low close of 804.64 on October 7, 2002, a drop of about 82.897%.

Many investors were burned when the bubble burst and have shunned technology stocks ever since. I personally fell into that camp myself until I reevaluated my position in 2009. Although the technology bear market that extended between March 2000 and October 2002 (or March 2009, the bottom of the financial crisis bear market) was painful, technology stocks now currently have lower valuations than non-technology stocks and are likely to outperform in the near future. For example, as of the market close on August 24, 2012, the Nasdaq-100 had a P/E ratio of about 11.89, which is probably about 10% of what it was at the time of the Nasdaq-100 index's peak on March 27, 2000. The S&P 500 index, on the other hand, currently has a much higher P/E ratio of about 16.25.

It would not surprise me to see technology stocks go on a multi-year run as investors reconsider the potential of high tech companies. 

*This chart does not account for reinvested dividends as I have not been able to locate a reliable source for total dividend-adjusted returns for the Nasdaq-100.
** I have posted updated returns for the Nasdaq-100 through 2014 in another post.

Saturday, August 25, 2012

Historical Returns for the MSCI Emerging Markets Index (1988-2011)

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, and 1988-2010 time periods.

The chart below lists annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2011. The returns shown below represent net dividend reinvested returns.*

As illustrated below, the MSCI EM Index is extremely volatile. During the 24 years for which I have data (i.e., 1988-2011), the MSCI EM Index lost value during 10 calendar years and gained value in 14 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%. 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 2.40% for the 5-year period, 13.86% for the 10-year period, and 6.87% for the 15-year period ending in 2011. Annualized returns between 1988 and 2011 were about 12.33% and the Index had a total new return of 1,529% between 1988 and 2011. The performance of the MSCI EM Index between 1988 and 2011 greatly exceeds the 9.45% annualized return and 773.66% total return of the S&P 500 Index during the same time period.

Emerging Markets should be critical portion of an investment portfolio of any stock market investor with a long-term investment strategy. The economies of Emerging Markets typically grow much faster than those of Developed Markets, such as the United States and the performance of equity markets of such countries often has a strong correlation with the overall economic growth of such countries. Also, as I have discussed previously, the U.S. Dollar will likely continue to weaken in the future as the country becomes more and more dependent upon foreign investment.

Investment advisers typically recommend limiting Emerging Markets to no more than 10-15% of an aggressive investor's portfolio.

* The performance data shown is slightly different than the performance data I saw for the MSCI EM Index at Index Universe, and I am not sure of the reason for the discrepancy.

 **I have updated this chart to include returns for 2012 in another post.

Saturday, June 30, 2012

Historical Annual Returns for the S&P 500 Index - Updated Through 2011

2011 was a volatile and below above-average year for the S&P 500 Index.   The U.S. stock market struggled in large part as a result of the continuing turmoil within Europe.  The S&P 500 Index rose a mere 2.11% in 2011.

The annualized return for the S&P 500 Index (and its precursor S&P 90 Index) between 1926 and 2011 was about 9.77%.  The 5-year annualized return through the end of 2011 was about -0.25%, one of the worst 5-year annualized return shown on the charts below.  The 10-year annualized return through 2010 was about 2.92%, a slight improvement over the weak 1.41% return recorded in the 10-year period ending in 2010.

According to the Wall Street Journal, as of June 29, 2012, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 12.95. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has supposedly been around 16 based on data dating back to the 1800s, so the S&P 500 Index may have some room to grow again in 2012. As of June 29th, 2012 the S&P 500 Index (including reinvested dividends) is up about 9.49% so far this year.

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

Friday, June 29, 2012

Historical Returns for the S&P 400 Midcap Index (Updated Through 2011)

The S&P 400 Midcap Index is the most widely-followed of all U.S. Midcap stock market indices.  This index was first introduced in June 1991.  I have previously posted charts with annual returns through 2007, 2008, 2009, and 2010. The chart below has been updated to include returns from 1992-2011.  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, the S&P 400 Midcap Index closed down slightly in 2011, dropping about 1.73%.  The annualized returns of the Index from 1992-2011 were about 10.96%, the 5-year annualized returns through 2011 were about 3.32%, the 10-year annualized returns through 2011 were about 7.04%, and the 15-year annualized returns were about 9.98%. The total returns (including reinvested dividends) between December 31, 1991 and December 31, 2011 were an impressive 699.85%.

As I have mentioned in previous years, I am a big fan of midcap stocks and 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 1992-2014.

Friday, February 03, 2012

1980 - 2011 Stock Market Returns for Various Indices

During the past several years I have posting charts showing annual stock market and bond market returns for various indices for the time periods from 1980-2006, 1980-2007, 1980-2008, 1980-2009, and 1980-2010. I have generated an updated chart to include returns from 2011 as shown below (click on the image for a larger view).

The chart shown below illustrates 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 Lehman Brothers Aggregate Bond Index ("BC Agg."))*, and the Nasdaq Composite Index.

2011 was a mediocre year for most stock market indicies as performance was held back by the financial turmoil in the Euro Zone. International indicies performed particularly poorly as American investors generally prefered to invest in the safety of bonds instead of foreign equities.

Bonds provided steady returns as they have since 1980, with the BC Agg. Index rising 7.84%, its best calendar year return since 2002. The S&P 500 Growth Index was the strongest equity performer of the indicies shown below, returning about 4.65%. The S&P 500 Index was the only other index which generated positive returns, rising a pedestrian 2.11% in 2011.

International equities were hammered during 2011, with the MSCI EAFE Index dropping 12.14%. Value equities also underperformed - the Russell 2000 Value Index dropped 5.50% and the S&P 500 Value Index dropped 0.48%. Tech stocks were also underperformers, as evidenced by the 1.80% drop of the Nasdaq Composite.

As shown in the chart below, the Russell 2000 Value Index provided the strongest returns by far between 1980 and 2011, returning a total of 4,105.20%, or an average of 12.39% per year. The total returns of the Russell 2000 Value Index has returned more than 1,300% more relative to its initial value on December 31, 1979 than the next best index I tracked, the S&P 500 Index.

* The BC Agg. bond index was known as the Lehman Brothers Aggregate Bond Index prior to 2008.

** Edit - January 2, 2017 ***
I have updated this chart with results through 2016.