In trading on Friday, Avista stock returns were above the 5% mark based on the quarterly dividend (annualized to $1.84), with shares trading as low as $36.03 on the day. Dividends are especially important for investors to consider, because historically dividends have provided a large share of the total stock market return. To illustrate, assume for example that you bought 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% decline over twelve years. But now consider that you collected $10.77 per share in dividends over the same period, increasing your yield to 13.15%. Even with dividend reinvestment, that works out to an average annual total return of about 1.0%; So, by comparison, collecting a return of more than 5% would look pretty attractive if that return was sustainable. Avista is a member of the Russell 3000, which gives it a special place as one of the 3,000 largest companies in the US stock markets.
In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability in each company. In the case of Avista, looking at the AVA’s historical chart below can help judge whether more recent dividends are likely to stick, and therefore whether it’s a reasonable expectation to expect a 5% annual return.
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