Dividends4Life: Benefits of dividend income

Benefits of dividend income

Posted by D4L | Wednesday, August 04, 2010 | | 0 comments »

Investors are being urged to consider the long-term benefits of equity income as interest rates and income payable on other asset classes, particularly government bonds, have fallen dramatically following the global financial crisis. A white paper entitled “The case for equity income investing” by the Newton group of asset management companies that form part of BNY Mellon Asset Management claims that income-focused investing will help to achieve a growing level of income as well as increasing capital.

Dividends tend to remain more stable than company earnings, offering protection in bear markets, and a yield-focused approach could also accelerate returns in a market recovery, the report states. Businesses that pay a dividend don’t necessarily have lower growth potential, with Newton quoting a US study by Arnott and Asness that demonstrated a positive link between dividend payouts and earnings growth, possibly due to greater capital discipline.

Source: SuperReview

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