Energy Transfer (NYSE: ET) can be a difficult stock to track. Over the last five years, the share price has risen by a total of 2.4%. There’s a hidden reality, however. Throughout that period, the company paid regularly dividends.
Right now, the dividend yield stands at an impressive 7.9%. What happens when you include those dividends into the total return?
This is how much a $500 investment would be worth today
Just based on stock price appreciation, a $500 investment in Energy Transfer stock would be worth just $512 today. When adding in dividends, however, that $500 investment would now be worth $816, a return of 63.2%. That’s a big difference — another reminder that it’s important to look at total returns, not just share price returns. Total returns account for things like dividends and spinoffs, which can artificially mask or depress a company’s true stock performance.
Even with dividends included, however, Energy Transfer shares have failed to match the return of the S&P 500 index, which delivered a total return of 87.9% over that time period. That’s not surprising. For the 14th year in a row, the S&P 500 index outperformed the majority of actively managed U.S. large-cap stock funds. It’s hard to beat the market, whether it’s through a single stock like Energy Transfer or a professionally managed basket of stocks.
Energy Transfer stock has performed much better than its share price suggests, but simple market indexes like the S&P 500 still have the upper hand over the long term.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
If You’d Invested $500 in Energy Transfer 5 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
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