LO Crosses Above 5% Yield Territory

Looking at the universe of stocks we cover at Dividend Channel, in trading on Tuesday, shares of Lorillard, Inc. (NYSE: LO) were yielding above the 5% mark based on its quarterly dividend (annualized to $6.20), with the stock changing hands as low as $123.58 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 S&P 500 ETF (SPY) back on 12/31/1998 ? you would have paid $123.31 per share. Fast forward to 12/31/2011 and each share was worth $125.50 on that date, a mere $2.19 or 1.8% increase over all those years. But now consider that you collected a whopping $23.90 per share in dividends over the same period, increasing your return to 21.15%. Even with dividends reinvested, that only amounts to an average annual total return of about 1.7%; so by comparison collecting a yield above 5% would appear considerably attractive if that yield is sustainable. Lorillard, Inc. (NYSE: LO) is an S&P 500 company, giving it special status as one of the large-cap companies making up the S&P 500 Index.

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