I bought Phillip Morris during the Clinton years when they were getting hit hard in the courts. Bought them at $23.50, and from there they just kept rising. The yield at the time was something 9.3%. I made a small fortune with that one stock when I finally sold several years later.Notice as the price has risen the dividend yield moved inversely...from 5.4% to 2.3%
Yeah, because as the rise in price the dividend hasn't increased.
Yes, that's the funny thing about percentages which is what I was trying to illustrate.
In Jan 09 you could buy in at $30 and get a dividend of $1.68 per share, which when you express as a percentage of the price was around 5.4%
In Sept of 09 you could buy in at around $50 and still get the same dividend of $1.68 per share, which when expressed as a percent of the price was around 3.4%
So if you had bought in at $30 you would still have been yielding a dividend of 5.4% of your cost. So the cost of yielding a $1.68 dividend went up.
Now today the dividend is actually up a bit to $1.76 per share, which when expressed as a percentage of the price is around 2.30%.
SO if you bought in at $30, not only did you gain $46 per share, your dividend yield actually went up by .8 cents per share!
A win / win all around! True story!
Goes to show that the best time to buy a straw hat is winter.