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.