No Lost Decade Here

Posted by D4L | Saturday, December 29, 2012 | | 0 comments »

I recently read an excellent article by Tim McAleenan Jr. in which he discussed how "dead money" isn't really dead if you buy dividend growth stocks. He highlighted some stocks which have had very small capital appreciation over the past 5 years, but when you include the dividends that you were paid the returns were actually fairly decent. It made me think about "The Lost Decade" of 2000-2010 in which the market as a whole basically went nowhere.

There were 110 stocks on the CCC list that have increased their dividend for 22 years or more. Using the adjusted closing prices from Yahoo.com I calculated the return for each stock since 2000. To me this is clear evidence (not proof, but evidence) that a dividend growth investing strategy can succeed even in the most difficult periods, such as we have seen since 2000. Even though the market as a whole has gone nowhere, a well diversified portfolio of dividend growth stocks, with dividend reinvesting, should have done well.

Source: Seeking Alpha

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