Yesterday I did a conference call with AdvisorShares that covered a lot of ground, including a reason or two to try to hold stocks (or funds) for the long term. In related news, client-holding Johnson & Johnson (JNJ) hiked its dividend for the 50th year in a row.
On yesterday’s call there were questions about our performance and the context of a call like that allows for specific numbers (the blog does not because it makes a blog post an advertisement which needs approval) and so I made a couple of references to things we have held for years.
Although not mentioned on the call, we have owned JNJ as far back as when the portfolio’s performance started being tracked in 2004. Since then JNJ has paid 31 dividends (I believe the clock on the portfolio starts in August 2004) totaling $13.57. On a price basis JNJ has trailed the S&P 500 by about 15 percentage points. The dividends add another 25 percentage points on to the JNJ result. After factoring in the SPX’ yield it is probably close to a push. I would note that the same study done on December 31, 2011 would probably have JNJ noticeably ahead as the stock is flat this year versus an 11% gain for the market.
The stock has not been a huge winner but the yield clearly helps the total return and the relatively low volatility helps with smoothing out the ride.
Another example with a more noticeable difference is Statoil (STO) versus the Energy SPDR (XLE). We’ve owned STO for almost seven and half years. In that time it has outperformed XLE modestly, by about 6%. Since we’ve owned STO we have collected $9.74 in dividends, which adds 68% to the return in that time. XLE has paid $5.51 in that same time, which works out to adding 15% in returns. (As a note, the $9.74 includes $1.21 which is being reported by dividend.com at the 2012 payout).