There are potential benefits to investing long-term in a company that regularly increases its dividend. The longer you hold your shares, the higher the yield you will receive on your original investment, assuming dividends increase over time. Additionally, the compounding of reinvested dividends could generate increased investment returns over time.
As an example: Investors who purchased Realty Income shares on 12/31/2004 and collect their dividends have received (as of 3/31/15):
- 9.0% yield on cost (vs. an original yield of 5.2%)
- 104% increase in the value of shares
- 72% increase in the amount of dividend income
- 71% of the original investment paid back as dividend income
Investors who have elected to reinvest their dividends have enjoyed the following returns over time (as of 3/31/15):
Past performance is not a reliable indicator of future performance. There is risk that dividends will not always increase, that dividends will not be declared according to past history, or that dividends will be declared at all.