For investors interested in the Services sector, the list below offers five stocks that have rewarded their shareholders with double-digit-percentage total returns over the past year.
Total return over a specific time period is an easy way to gauge an equity’s total performance. This metric represents combined gains from an equity’s asset appreciation and dividend income payouts.
One way to calculate the total return is to assume all dividends are immediately invested into additional shares of the equity and generate additional capital gains. Many financial analysis applications and websites offer tools to make that calculation. However, a simpler version of total returns offers investors equally valuable information about the equity’s performance.
For the alternative calculation, investors can simply add total dividend payouts over a desired period of time to the difference between the ending share price and beginning share price to calculate the total return. This second calculation is so easy and simple that it can be completed with just a calculator.
In addition to double-digit-percentage total returns, the five good dividend stocks on this list below offer additional characteristics that make these equities worthy of consideration right now. The dividend yields of all five stocks exceed 2.5% and all five ex-dividend dates are within the next 10 days. Therefore, interested investors should complete their own analysis and due diligence promptly and claim ownership in these good dividend stocks to buy now before the upcoming ex-dividend dates.
Furthermore, the total return over the past 12 months exceeds individual stocks’ current yield. That is an indication that the share prices have risen over the past year to complement the dividend income payouts for balanced overall gains.
5 Services Sector Stocks with Double-Digit-Percentage Returns in the Past Year: #5
Best Buy Company, Inc. (NYSE:BBY)
Best Buy’s current $0.50 dividend distribution is equivalent to a $2.00 annualized payout and yields 2.6%. The company has boosted its annual dividend payout every year since beginning dividend distributions 17 years ago. The 10-fold advancement since 2003 corresponds to an average dividend growth rate of 14.5% per year.
Before a sharp decline in the last quarter of calendar 2018, the share price maintained a steady uptrend and gained more than 150% over the preceding three years. The share price entered the trailing one-year period on the tail end of a fourth-quarter 2018 pullback driven by an overall market correction. However, after reaching its 52-week low of $48.24 on December 4, 2018, the share price reversed its direction and headed higher.
Despite a couple of additional pullbacks, the share price rose nearly 70% before its 52-week high of $81.57 on November 26, 2019. While almost 3% below the recent peak, the December 4, 2019, closing price of $79.18 was 27% higher than it was 12 months earlier and 64% higher than the 52-week low from late-2018.
The 27% asset appreciation since the onset of the trailing 12-month period and the rising dividend income payouts combined for one-year total return of more than 30% The three-year total return exceeded 80% and Best Buy’s shareholders more than doubled their investment over the past five years with a total return of almost 140%.
5 Services Sector Stocks with Double-Digit-Percentage Returns in the Past Year: #4
Fastenal Company (NASDAQ:FAST)
The company increased its regular dividend every year for the past two decades. Since the 2009 financial crisis, Fastenal enhanced its annual dividend payouts nearly five-fold, which corresponds to an average growth rate of more than 17% per year. The current $0.22 quarterly dividend payout is equivalent to an $0.88 annualized dividend and a 2.5% yield.
Fastenal’s share price declined during the first three weeks of the trailing 12-month period and reached its 52-week low of $24.68 on December 24, 2018. After bottoming out at the end of 2018, the share price reversed direction and gained almost 53% before reaching its 52-week high of $37.66 on October 23, 2019.
However, the share price pulled back after peaking and closed on December 4, 2019, at $35.06, which was 22.4% higher than one year earlier and 42% above the 52-week low from December 2018. Over the past 12 months, the company’s share-price growth and rising dividend payouts combined for a 25.5% total return. Additionally, the total returns over the past three and five years exceeded 56% and 66%, respectively.
5 Services Sector Stocks with Double-Digit-Percentage Returns in the Past Year: #3
Home Depot, Inc. (NYSE:HD)
Home Depot’s current $1.36 quarterly dividend is 32% higher than the $1.03 distribution amount from the same period last year. This new quarterly payout corresponds to a $5.44 annualized distribution and currently yields 2.6%, which outperformed Home Depot’s own 2.11% five-year yield average by almost 23%.
The share price entered the trailing 12-month period on a brief downtrend, which was driven by the downward pressure from the overall market correction in the last quarter of 2018. After dropping a quarter of its value since mid-September 2018, the share price reached its 52-week low of $158.14 on December 24, 2018. However, free from the downward market pressure, the Home Depot share price reversed trend and recovered all fourth-quarter 2018 losses by the beginning of July 2019.
The share price continued to advance until it reached its most recent all-time high of $238.85 on November 18, 2018, which was 51% above the 52-week low from December 2018. After peaking in mid-November, the share price pulled back 12% and closed on December 4, 2019, at $210.14. While down from its recent all-time high, this closing price was still nearly 20% higher than it was one year earlier and 33% above the December low.
Over the trailing 12 months, the company’s recent investors enjoyed a 23% total return. However, the longer-term investors received total returns of nearly 75% over the past three years and more than 136% over the past five years.
5 Services Sector Stocks with Double-Digit-Percentage Returns in the Past Year: #2
Sysco Corporation (NYSE:SYY)
Driven by the overall market correction, the share price interrupted its uptrend that began in mid-2015 and dipped to its 52-week low $59.95 on December 24, 2018. However, after the downward pressure from the overall market correction disappeared, the share price resumed its uptrend and gained 36% before reaching its 52-week high of $81.61 on November 15, 2019.
Since peaking in mid-November, the share price pulled back slightly and closed on December 4, 2019, at $82.00, which was just 0.5% below the 52-week high. While marginally lower than the recent peak, the Dec. 4 closing price was 24% higher than it was one year earlier, nearly 37% above the 52-week low from late-December 2018 and double its price from five years ago.
In addition to its double-digit-percentage asset appreciation, the one-year capital gain combined with dividend income yielding 2.2% to deliver a total return of more than 25% over the trailing one-year period. The asset appreciation and rising dividend payouts also joined to deliver a 61% total return over the last three years. Lastly, the company’s long-term shareholders more than doubled their investment over the last five years with a total return of more than 122%.
5 Services Sector Stocks with Double-Digit-Percentage Returns in the Past Year: #1
Target Corporation (NYSE:TGT)
With a streak of 47 consecutive annual dividend hikes, Target has successfully maintained its dividend growth strategy. Over the past two decades, the company has enhanced its annual dividend amount 13-fold, which corresponds to an average annual growth rate of 13.2%.
Target’s current $0.66 quarterly payout is 3.1% higher than the $0.64 distribution from the same period last year. The current dividend payout is equivalent to a $2.64 annualized distribution and yields 2.13%, which is unfortunately 32% below the company’s own 3.19% five-year average yield.
However, this is one of the aforementioned cases where the share price growth suppressed the dividend yield. Year to date in 2019, Target’s share price has nearly doubled. After a small pullback at the beginning of the trailing 12-month period, the share price reversed trend and has been rising relatively steadily since late-2018.
While demising the dividend yield, the robust asset appreciation combined with dividend income payouts for a total return of almost 83% over the last year. A share price pullback between early 2015 and mid-2017 kept the three year total return below 70%, but the five year total return was more than 85%.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.