Looking at the universe of stocks we cover at Dividend Channel, in trading on Thursday, shares of Leggett & Platt, Inc. (Symbol: LEG) were yielding above the 2% mark based on its quarterly dividend (annualized to $0.2), with the stock changing hands as low as $9.64 on the day. Dividends are particularly important for investors to consider, because historically speaking dividends have provided a considerable share of the stock market's total return. To illustrate, suppose for example you purchased shares of the iShares Russell 3000 ETF (IWV) back on 5/31/2000 — you would have paid $78.27 per share. Fast forward to 5/31/2012 and each share was worth $77.79 on that date, a loss of $0.48 or 0.6% decrease over twelve years. But now consider that you collected a whopping $10.77 per share in dividends over the same period, increasing your return to 13.15%. Even with dividends reinvested, that only amounts to an average annual total return of about 1.0%; so by comparison collecting a yield above 2% would appear considerably attractive if that yield is sustainable. Leggett & Platt, Inc. (Symbol: LEG) is a member of the Russell 3000, giving it special status as one of the largest 3000 companies on the U.S. stock markets.
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In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Leggett & Platt, Inc., looking at the history chart for LEG below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 2% annual yield.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
