Last week's article, High Yield Or High Growth: Which Belongs In
Your Portfolio?, presented a handful of spreadsheets that calculated the future results for varying initial dividend yields and growth rates. However, while those tables are helpful in showing potential results that differing growth rates can provide, they fall short of providing actual real-world analysis. It's one thing to have a mathematical formula produce results, but quite another for a stock to do the same.
In that spirit, I thought it would be beneficial to find some companies that have produced long track records of earnings and dividend growth to see if their returns came close to matching the tables' forecasts.
To do so, I will be using F.A.S.T. Graphs, which does an excellent job of showing the historical valuation for stocks, as well as the all-important earnings growth, dividend growth, beginning dividend yield, cumulative dividends, and total returns over varying time periods. Essentially, all of the information that was presented in my theoretical return matrix.
For this exercise, I will identify companies from the varying growth and yield areas: high yield/low growth, mid-yield/mid-growth, and low yield/high growth.
F.A.S.T. Graphs has data going back to 1998, and is able to provide a snapshot of varying time frames over the spanning years. For my comparison, I will look for a rolling 10-year period from which the company began and ended trading at a similar valuation level. I will then compare how the stock performed over that decade with what the tables project for a similar yield and growth rate.
High-Yield/Low-Growth Examples
The first example comes from a company that calls itself "The Monthly Dividend Company", Realty Income Corporation (NYSE:O). Realty Income is known as one of the most consistent and reliable REITs in the market, and is widely held by
