![[Financial Management Sharing Forum] - A student asked if SPY can be bought now that it has risen a lot...](/_next/image?url=%2Fimages%2Fblog%2Ffb-posts%2Fen%2Ffb-post-0030-cover.png&w=3840&q=75 "[Financial Management Sharing Forum] - A student asked if SPY can be bought now that it has risen a lot...")
[Financial Management Sharing Forum] - A student asked if SPY can be bought now that it has risen a lot...
[Financial Management Sharing Forum] - A student asked: SPY has risen a lot now... Is it worth buying? Date of writing: July 30, 2018 People who are investing in the US index (ETF) SPY now know how to calculate the value of SPY. If you buy it now for $280, what is the expected annual return? First of all, we need to know how much dividends SPY pays every year and what is the annual dividend growth rate. The past four seasons (Q3 ~Q4
[Financial Management Sharing Forum] - A student asked if SPY has risen a lot now... Can I buy it?
Date written: July 30, 2018
People who invest in the U.S. Index (ETF) SPY now know how to calculate how much SPY is worth. If you buy it now for $280, what is your expected annual return?
First of all, we need to know how much dividends SPY pays every year and what the annual dividend growth rate is.
The total dividends for the past four seasons (Q3 Q4 2017 and Q1Q2 2018) are $4.929. You can find SPY's quarterly dividends on the following webpage.
[http://finance.yahoo.com/q/hp](https://l.facebook.com/l.php?
u=http%3A%2F%2Ffinance.yahoo.com%2Fq%2Fhp&h=AT0noUNktEFyyms042nv4xWsBaSzLY_CQqbB5Z8PxWhUAkx2g0cO76srTjrn08bE7g4VBtc-oTnIL54nOm1oQWbZNF0H_4VMutG9P16GtR2DFhSDX4NJeJhg40F39uaOMk1zeeQGJ70YHsuH&tn=-UK-R&c%5b0%5d=AT2esj-t6sND-208LjfR8i2FvAKWOzCt7Jwmshq9V7SNnMasGsQnbR8I8jg3VvuzThk96L0H4ICQboU299UOj4zzhVrd71DIibwriP4tH2VYu-r1xtGIHEeOudBeVDkl8zEYIv5t6z2zWfqfes8cVkLcN8_sYTgzShxiiR5dd-grreQ2XssKJok5l2KtldE)
The total dividends for the previous four quarters (Q3Q4 2016 and Q1Q2 2017) were $4.626. SPY’s dividend annual growth rate is ($4.929- $4.626) / $4.626= 6.55%. If calculated based on SPY’s current stock price of $280, the dividend value interest rate is $4.929 / $280 = 1.76%.
So if you can get a fixed return of 1.76% per year by holding SPY, plus the return on stock price growth caused by dividend growth, then the annual return on the stock price will be the same as the dividend growth rate of 6.55%.
So those who buy SPY now can expect an annual return of 1.76% + 6.5% = 8.26%.
So even though the stock price has risen a lot now, the return on buying and investing in stocks is actually still very high. But everyone must be brave enough to buy SPY and QQQ and endure the market fluctuations. There is no doubt about the long-term returns.
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