OGS exceeds yield territory by 3%

LLooking at the universe of stocks we cover on the Dividend Channel, trading Monday, shares of ONE Gas, Inc. (Symbol: OGS) were selling above the 3% mark based on its quarterly dividend (annualized at $2.48), with the stock changing hands as low as $81.89 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 iShares Russell 3000 ETF (IWV) on 05/31/2000 – you would have paid $78.27 per share. Fast forward to 05/31/2012 and each share was worth $77.79 on that date, a loss of $0.48 or a decrease of 0.6% year over year. But now consider that you received a whopping $10.77 per share in dividends over the same period, boosting your yield to 13.15%. Even with dividends reinvested, this only represents an average annual total return of around 1.0%; thus, by comparison, collecting a return above 3% would seem considerably attractive if that return is sustainable. ONE Gas, Inc. (Symbol: OGS) is a member of the Russell 3000, which gives it special status as one of the 3000 largest companies on US stock markets.

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 ONE Gas, Inc., reviewing the OGS historical chart below can help determine whether the most recent dividend is likely to continue and, therefore, whether it is reasonable to expect a 3% annual return.

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