Dividend investing is one of the most popular themes among investors — and rightfully so. Multiple studies have confirmed the market-busting returns of dividend stocks. Ned Davis Research found that over the four decades through 2014, dividend-paying stocks returned 7.6% on an annualized basis versus just 2.6% from stocks that paid no dividend. And that’s just the companies that kept their payouts consistent. Companies that regularly increased their dividend payouts returned 10.1% annually. #-ad_banner-#Not only do dividend stocks often outperform their non-dividend peers but they do it with less risk. Over the five years through 2015,… Read More
Dividend investing is one of the most popular themes among investors — and rightfully so. Multiple studies have confirmed the market-busting returns of dividend stocks. Ned Davis Research found that over the four decades through 2014, dividend-paying stocks returned 7.6% on an annualized basis versus just 2.6% from stocks that paid no dividend. And that’s just the companies that kept their payouts consistent. Companies that regularly increased their dividend payouts returned 10.1% annually. #-ad_banner-#Not only do dividend stocks often outperform their non-dividend peers but they do it with less risk. Over the five years through 2015, dividend stocks recorded a standard deviation (a measure of risk in returns) of just 10.0 versus 14.3 for non-dividend payers. But historically-low interest rates have forced investors out of bonds and into dividend stocks for yield. Valuations look stretched and the U.S. economy just recorded its slowest growth in three years. While there’s no reason to believe that dividend stocks won’t continue to outperform the market going forward, investors can’t ignore record-high valuations after eight years of surging stock prices. It does little good to grab a hefty 3% dividend if valuations collapse and prices fall 10% or more. But… Read More