I know this will be old news for many on here, and I have posted this info before, but based on conversations I have had with a few people lately, I also know this is not as widely known as one would believe.
Below is a selection of High Dividend paying stocks, plus a wide range of ETFs and Mutual Funds. It is sorted from largest to smallest growth over that last 5 years. The percentage growth is the growth in the actual share price/fund price over that time. So a $10 stock or fund 5 years ago that grew 100% , is now worth $20.
What you have to consider when looking at relative growth rates is the percentages displayed are all in for ETFs and Mutual funds, as nearly none of them pay any kind of a dividend. (There are exceptions to that like ZWB, ZWU and others described as High Dividend Yield Funds that are designed to generate dividend income, but they are the minority. For most funds, at best dividends are rolled back into the fund.)
For the individual stocks you need to consider the dividend stream that they throw off, in addition to the simple growth in share prices. So for example, using the rule of 72, a stock with a 7.2% dividend would double in 10 years, one with a 4% dividend would double in 18 years, so for the 7.2% yield, the dividend would increase the total growth by an additional 50%, roughly, in a 5 year period. You need to add the extra growth to the displayed growth number to get an apples to apples comparison.
So for example BCE, which is the worst 5 year performer on the list, is currently paying an 8.2% dividend, which means it would double in 8.8 years. So in the chart below, BCE shows a negative -26.2% growth rate over 5 year, add the dividend re-investment back and that becomes a 25% growth rate. So, even though the share price itself has dropped from $53.97 Jan 2, 2019 to 48.50 over 5 years, you have collected the $4 per year dividend, paid quarterly. That amounts to $20 over 5 years, which means you are better than even on the share price drop, even if you spent the dividends. If the dividend had been re-invested in BCE through the drip, you would have been buying shares every quarter, so often at prices lower than $54, sometimes higher. (This is dollar cost averaging at work)
BCE.TO
Start date: 01/02/2019
End date: 09/06/2024
Start price/share: $53.97
End price/share: $48.50
Starting shares: 185.29
Ending shares: 259.01
Dividends reinvested/share: $19.55
Total return: 25.62%
Average Annual Total Return: 4.10%
Starting investment: $10,000.00
Ending investment: $12,563.50
Years: 5.68
Royal Bank's 5 year growth goes from +62.5% to over 118% when you roll the dividend back into it. Thus my comments about how important safe, and growing dividends that are re-invested using the DRIP programs, are to total return. (This is admittedly a somewhat simplified description of how this works, but for the purposes at hand, it illustrated the point)
RY.CA Growth of $10,000.00
With Dividends Reinvested
Click for detailed chart tool
Start date: 01/02/2019
End date: 09/06/2024
Start price/share: $93.62
End price/share: $164.08
Starting shares: 106.81
Ending shares: 133.20
Dividends reinvested/share: $26.08
Total return: 118.56%
Average Annual Total Return: 14.76%
Starting investment: $10,000.00
Ending investment: $21,856.34
Years: 5.68
I hope this helps simplify understanding the common growth charts that are posted for stocks and funds.
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