The Power Of Compounding Dividend Payments

Posted by D4L | Saturday, September 17, 2011 | | 0 comments »

A lousy end to summer for world stocks has left fat dividend yields easier to find. The MCSI All Country World Index lost 13% during the third quarter through Tuesday and carries a 3% dividend yield, according to Bank of America Merrill Lynch (BAC: 7.05, 0.07, 1.00%). Its euro-zone component, which tumbled 22%, now pays 5.5%. Even in the U.S., where yields are much stingier, one-quarter of S&P 500 members now pay more than 3%.

For long-term investors, that might be reason enough to put spare cash to work. Gains are grand, but even sleepy stocks can pay off nicely given the combination of dividends, reinvestment and time. Consider New York City's power company, Consolidated Edison (ED) 1.20%. It's old-economy, to say the least: One of its predecessor firms, New York Gas Light Co., was listed on the New York Stock Exchange 23 years before Thomas Edison was born.

Source: SmartMoney

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