The importance of investing in dividend-paying stocks should never be underestimated. Not only do these stocks offer a steady stream of income, they also offer the potential for capital gains.
In fact, countless studies demonstrate that dividend-paying stocks outperform non-payers by a wide margin. From 1972 to 2006, dividend-paying stocks returned an average of 10% annually versus 4% for non-dividend payers, according to Ned Davis Research. Going back to 1926, other studies confirm almost half of the S&P 500′s return was due to the dividends paid by the companies in the index. That said, it's tough to find reliable dividend investments in the current market, with industry titans like General Electric and Dow Chemical having cut their dividends in recent years.
Source: Motley Fool
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