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.

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 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.