NTAP dividend yield exceeds 3%

LLooking at the universe of stocks we cover on the Dividend Channel, in Thursday’s trading, shares of NetApp, Inc. (Ticker: NTAP) were selling above the 3% mark based on its quarterly dividend (annualized at $2), with the stock changing hands as low as $66.10 on the day. Dividends are particularly important for investors to consider because historically, dividends have provided a sizable portion of total stock market return. To illustrate, say for example that you bought shares of the S&P 500 ETF (SPY) on 12/31/1999 – you would have paid $146.88 per share. Fast forward to 12/31/2012 and each share was worth $142.41 on that date, a decrease of $4.67/share over all those years. But now consider that you received a whopping $25.98 per share in dividends over the same period, for a positive total return of 23.36%. Even with dividends reinvested, this only represents an average annual total return of around 1.6%; thus, by comparison, collecting a return above 3% would seem considerably attractive if that return is sustainable. NetApp, Inc. (Symbol: NTAP) is an S&P 500 company, giving it special status as one of the large-cap companies comprising the S&P 500 Index.

In general, dividend amounts are not always predictable and tend to follow the ups and downs of each company’s profitability. In the case of NetApp, Inc., reviewing the historical NTAP chart below can help determine whether the most recent dividend is likely to continue and, therefore, whether it is reasonable to expect an annual return of 3%.

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