Pearson Dividend History 2005 onwards
Based on Pearson dividend history 2005 onwards we can show you why we believe that from an income investing perspective Pearson is an interesting candidate.
Pearson - an example company
Suppose you bought 1000 shares in Pearson during May 2005. The group's share price fluctuated during that month between £6.35 and £6.66 Lets pick a date, say May 16th, when the closing share price was: £6.49 Excluding stockbroker commissions and any taxes, you therefore paid a total of £6,490.
Let's first check the dividend yield for 2005?
You would have received a dividend of almost 26 pence per share for 2005. Now, divide your dividend of £0.257 a share by your original purchase price of £6.49 and multiply with 100 and your dividend yield at the time amounted to almost 3.96 per cent. Not bad
Since, according to the Pearson dividend history 2005 onwards table, the Group has been paying a dividend consistently - in fact:
Pearson has increased its dividend by an average of
7.1 per cent every year!
And what's happened with your dividend pay-out?
Based on the Pearson dividend history 2005 onwards table we can calculate that when the final dividend for 2009 (in 2010) was paid, Pearson's dividend pay-out has increased by 41 per cent since 2005 to £0.363 per share
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What has happened with your annual yield based on your initial purchase price?
You bought Pearson shares based on an average price of £6.49 per share. Five years later, you’re receiving a total dividend payment amounting to almost £0.363 a share. Again, divide that £0.363 a share by your original purchase price of £6.49 and multiply with 100:
Your effective yield is now almost 5.6 per cent
As long as Pearson is able to keep boosting its dividend, and you keep holding the shares, there is no limit to how high your effective yield can go.
And what about Pearson's capital appreciation?
As per the Pearson dividend history 2005 onwards table Pearson have increased their dividends each year, however it has also increased in value over time.
Remember 2005, in our example above, our average purchase price for Pearson shares amounted to £6.49
From a capital appreciation perspective holding Pearson shares since 2005 has been rollercoaster ride!
While steadily increasing to almost £9.15 in May 2007, Pearson’s share price collapsed over a 17 month period to a closing low of £519.50 on October 10th, 2008 (day's lowest was £4.92!) – substantially below our hypothetical purchase price of £6.49. Since, Pearson’s share price went through a remarkable recovery, even breaching £10 per share several times during 2010.
Let me summarise this for you:
- if you had purchased 1000 Pearson's shares in May 2005, at a cost of £6.49 per share, your overall cost would have been £6,490 (excluding purchase costs)
- on average Pearson's dividend has risen slightly over 7.1 per cent per annum, from almost 26 pence in 2005 to £0.363 per share for 2010
- whilst, during 2010, the share price has been trading in £8.30 - £10.50 range, per share.
Since May 2005, your total return, as a result of holding 1000 shares in Pearson Plc, is as follows:
- your shares are now worth approx £10 per share
- your total shareholding is now worth approx £10,000 – 54 per cent more than you paid for them
- you have received dividends totalling £1,859
- for 2010, you have received an annual gross dividend payment of £0.363 per share, totalling £363
- providing you with an effective dividend yield of 5.6 per cent.
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What else can I say?
Accelerating Annualised Dividend Growth Rate!
Before we consider the sustainability of Pearson's dividend and its growth prospects, it's a good idea to first consider what's happened so far.
Over the four periods under consideration Pearson's annualised dividend growth rate has been relatively stable, whereas the last three years the annualised dividend growth rate has in fact somewhat accelerated.
We believe, barring unforeseen circumstances, that the dividend is unlikely to be cut anytime soon. Instead, further increases are likely.
Barring unforeseen circumstances, dividends for the year ending 31 March 2011 remain on course to the stated target of dividend increases by 8 per cent, each year, through to 2012. As a result, we are pencilling in a dividend increase to £0.4157 per share.
If Pearson continues to increase the dividend payout by (a conservative?) 7.5% each year, your annual yield on investment of 5.6 per cent will grow to 6 per cent (£385) and the following year to 6.5 per cent (£410), etc.
What About Pearson's Dividend Growth Rates?
I would like to refer to Todd Wenning's excellent write up regarding the sustainability of Pearson's dividend and growth prospects.
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Return to Pearson for more recent information on their dividend policy.
Return to Dividend Risers for information on other companies with an amended dividend policy.
WE WOULD LIKE TO POINT OUT, THAT:
1.√the above mentioned Dividend History table is solely an example of a UK listed company's dividend history and is not to be construed as a share recommendation. Neither Early Retirement Investor nor EMAR Publishing are registered as an investment advisor or as an independent financial advisor and do not provide individualised advice
2.√the price of shares and investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested
3.√where the information consists of pricing or performance data, the data contained therein has been obtained from company reports, financial reporting services, periodicals, and other sources believed reliable
4.√data computations are not guaranteed by Early Retirement Investor.com or any of the data providers and may not be complete.
5.√The editor or contributors may have an interest in the share mentioned.
6.√Dividend yields move up and down. As a company’s share price increases the dividend yield falls. And vice versa: if the share price falls the dividend yield increases.
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