When making an investment decision, there are many important factors that must be considered. For instance, how safe is the investment?, how is it currently priced?, what are the potential benefits and risks facing the company in the future? The list goes on…
Although investors should never rely too heavily on a stock’s past performance for judging how it will perform in the future, it can be used to assist in determining the company’s volatility. For instance, when a company has performed well and consistently delivered above-par results, it is a good indicator of a strong business.
Below are a number of companies that have delivered an average annual return of over 15% for the last five years whilst also offering a dividend yield greater than 5%.
Bigair Group’s (ASX: BGL) average annual return over the last five years has been an outstanding 80%, having climbed from as low as 3c per share to its current price of 81.5c. The company provides fixed wireless broadband solutions for businesses and currently boasts a market capitalisation of just $139 million, leaving plenty of room for growth. A dividend yield of 6.9% is just icing on the cake.
Iron ore miner BC Iron (ASX: BCI) has defied the trend set by other miners over the last few years, taking its five-year average return to 77.6% with an 8.5% dividend yield. The company performed strongly for the 2013 financial year, increasing net profit after tax for the year by $20.8 million to $71.4 million.
Sydney Airport (ASX: SYD) has maintained an average annual return of 23.7% and offers a dividend yield of 5.4%. Meanwhile, investors in airline group Air New Zealand (ASX: AIZ) have also realised average annual gains of 17.4% in addition to the 6.3% dividend yield.
Whilst retail might not have been the greatest performing sector in recent years, that hasn’t stopped RCG Corporation (ASX: RCG) or Specialty Fashion Group (ASX: SFH) from making significant gains. RCG, which owns and operates a number of footwear businesses such as Athlete’s Foot Australia, has given average annual returns of 33.8% and offers a dividend yield of 5.8%. In the same time, Specialty Fashion has averaged returns of 26.6% and offers a 5.1% yield.
Each of the big four banks have also delivered outstanding results. Westpac (ASX: WBC), NAB (ASX: NAB) and Commonwealth Bank (ASX: CBA) have averaged returns of 18%, 15.6% and 19.4%, respectively, and they each now offer a dividend yield of 5.2%, 5.2% and 5.1%.
Whilst ANZ (ASX: ANZ) may have averaged 19.9% over the last five years – the highest of any of the big four – it narrowly missed out on a place within this list given that its dividend yield is 4.8%.
As previously stated, although it can be used as an indicator for volatility, past share performance should not be relied upon for determining future returns. For instance, whilst some of the abovementioned companies have performed strongly, they may no longer represent good buying opportunities, however, there are still plenty of excellent alternatives for your portfolio.
For instance, you could discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”
- Master investing by mastering your emotions
- Telstra employs 10,000 offshore
- Why the Dick Smith IPO will be a dud
- 3 strategies to diversify your portfolio
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
- Coronavirus (COVID-19): 6 charts every Australian needs to see – April 6, 2020 1:46pm
- Innovation through crisis – April 2, 2020 11:48am
- Coronavirus (Covid-19): Why Is Italy’s Fatality Rate So Bad? – March 26, 2020 3:39pm