If You Invested $10,000 in Realty Income at the Turn of the Century, This Is How Much You Would Have Today
Investors often view stock performance through a myopic lens, focusing only on stock price appreciation. That's fine if a company doesn't pay dividends, but dividend-paying stock performance should really be considered with a broader metric: total return. Realty Income (NYSE: O) helps show why this is so important and why you still might want to add this boring real estate investment trust (REIT) to your portfolio.
Dividends are a powerful tool, offering investors a way to value stocks (relative dividend yield) and a way to compound returns (dividend reinvestment). The latter point is the one that's so important to consider if you are a long-term investor. One frequent piece of advice is to dollar-cost average by investing on a regular basis over time. If you reinvest your dividends you are, basically, doing just that. Only you don't have to come up with the cash; the company you've invested in does that for you. The impact can be huge.
Image source: Getty Images.
Source Fool.com
