Lost NHL Wages Could’ve Bought Millions of Shares of Dividend Stocks
With the cancellation of nearly half of the NHL season, the pro hockey players have lost $788 million and counting in salaries. From a finance prospective, here is a list of a few dividend stocks, along with how much of the company could be bought with $788 million.
Apple Inc. (AAPL)
Computer and mobile device maker Apple’s (AAPL) stock has been declining since the release of the highly anticipated iPhone in September 2012. The stock, which reached its all-time high of over $700 at the time of the release, is now being traded around $546.26. Although AAPL paid a quarterly dividend for nine years between 1987 and 1995, the company stopped paying dividends until 2012. The company currently offers an annualized dividend of approximately $10.60 per share, making for a yield of about 2%.
If an investor had $788 million to invest, and decided to invest in Apple, the investor could buy over 1.4 million shares of the company. With current dividends, the investor could earn over $15 million annually in dividend payments.
AT&T Inc. (T)
Telecom giant AT&T’s (T) stock has been up and down over the years, but its annualized dividend has had a continuous upward movement in the last ten years. In 2002, the company paid a quarterly dividend of 27 cents per share, but by 2012, that dividend increased by 38% to a quarterly dividend of 44 cents per share.
With $788 million, an investor would be able to purchase over 23 million shares of AT&T at the stock’s current price of $34.08. An investor today would earn $40.6 million in dividends this year if they invested the full $788 million into the stock’s annualized dividend of $1.76. If this trend continued in the next ten years, the dividends could reach $2.42 per share annually.
Microsoft Corporation (MSFT)
As the demand for Microsoft’s (MSFT) PC software declines, so does its stock price. MSFT’s stock price may see its ups and downs, but the company has been steadily increasing its dividend payments since 2005. Investors saw a 60% increase in dividends from 2005′s annualized dividend of 32 cents to 80 cents in 2012.
An investor looking to invest $788 million into the company could purchase 28.7 million shares at the current share price of $27.41. With the current annualized dividend payment of 80 cents per share, that investor would earn nearly $23 million in dividend payments this year.
Over the past nine years, the company averaged a little over 1 cent a year increase in quarterly dividend payment. Averaged out, in the next ten years, MSFT could be paying an annual dividend around $1.32 per share should that trend continue.
General Electric (GE)
Although GE’s stock took a plunge in 2009, the stock has slowly been working its way into an upward trend. In 2002, the stock paid a quarterly dividend of 18 cents, which increased every year until 2009. During the financial downfall, GE cut their dividends to just 10 cents a quarter. Since 2009, dividends have been increasing, but they have yet to reach the levels which were paid prior to 2009.
If an investor put $788 million into GE, they would be able to buy 36.5 million shares of that company at the current stock price of $21.55. An investor would earn over $24 million from the stock’s 68 cent annualized dividend this year.
Believe it or not, all those lost NHL wages could’ve actually bought entire companies. We’re not talking penny stocks here, either — some very legitimate companies have a market cap smaller than the total amount of lost NHL wages. For example:
- Alliance Financial Corp (ALNC) – This micro cap regional banker operates a few dozen branches and offers a 3% dividend yield. With a market cap of about $205 million, NHL players could’ve acquired ALNC more than three times over.
- York Water (YORW) – This company supplies drinking water to several municipalities in Pennsylvania. YORW offers a 3.2% dividend yield with a market cap of around $225 million.
- United-Guardian, Inc. (UG) – With a market cap of just $90 million or so, this maker of chemical compounds used in cosmetics and pharmaceuticals could easily be swallowed up by all those lost NHL wages.
With just a little more than half of the lost NHL salaries thus far, an investor could’ve bought all three of the companies listed above.
The Bottom Line
The NHL lockout has cost pro hockey players an amazing amount of money thus far. That money could’ve been used for smart investments like high-quality dividend stocks and already generated millions more in dividend returns. Although most investors don’t have hundreds of millions of dollars to put into the markets, hopefully this article illustrates the power of owning high-quality dividend stocks — and how badly the NHL lockout is hurting the players financially.
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