Dividends4Life: Dividend Stocks Beat Broader Market

Dividend Stocks Beat Broader Market

Posted by D4L | Thursday, October 21, 2010 | | 0 comments »

During the 13 years between 1938 and 1950, when 10-year interest rates were below 2.5%, high-dividend stocks returned an average of 18.1% (including dividends) whereas value-weighted market returns (including dividends) totaled 12.7%. High-dividend stocks not only managed to outperform the market by 5.4 percentage points a year, they had higher returns in 11 of the 13 years. The worst annual return of high-dividend stocks was minus 6.7% vs. minus 11.2% for the broader market.

High-dividend stocks provided protection when the market was down. In fact, they beat the stock market in all down years. They also beat the stock market every time the stock market increased by more than 20%. If the stocks repeat the same pattern in the following years, investors chasing high-dividend large-cap companies will manage to beat both the bond and stock markets by a large margin.

Source: TheStreet.com

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