Insider Monkey published an article last week showing how dividend yielding stocks beat the stock market by 5.4% when 10-year interest rates are below 2.5%. Investing in dividend stocks seems like a great idea if interest rates stay below 2.5% for a long time. Unfortunately, we can’t tell the future. Who knows where interest rates will be next month, next year, or the next decade? Let’s take a look at the long-term behavior of this investment strategy.
At the end of every year we picked the 20 highest dividend yielding stocks among the largest 500 stocks (between 1927 and 1950 we limited the universe to the largest 200 stocks, and between 1951 and 1965 the universe was the largest 300 stocks) and kept these stocks in our portfolio for exactly one year. Between 1927 and 2009, high dividend yielding stocks returned an average of 13.04% per year. The value-weighted market return was 11.68% during the same time period. The dividend stocks beat the overall market by an average of 1.36% per year. This is not negligible. The compounded return for dividend strategy is 3960 vs. 1990 for the broader market.
Source: Business Insider
Related Articles:
Does High Dividend Investing Hold Up Over Time
Posted by D4L | Wednesday, October 27, 2010 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
When looking for dividend stocks to invest in, it is advisable to choose companies that have strong dividend histories and stable balance sh...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.