Not everyone pays close attention to dividends, and some investors see dividends as a sign of poor growth prospects, but in the long run dividends can actually help investors earn superior total returns. In his 2005 book, "The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New," renowned market commentator Professor Jeremy Siegel identified dividends as one of the key drivers of long-term equity outperformance.
Our own equity-income specialist, Josh Peters, equities strategist and editor of the monthly Morningstar DividendInvestor newsletter, couldn't agree more. His philosophy with regard to dividends is fairly straightforward: "I am just as concerned with what happens to a company's earnings and cash flows as with how large those earnings are in the first place. Pay me a dividend, and I know I'm getting something from my investment I never need to give back. Pay me a dividend, and I have the flexibility to help fund my lifestyle in retirement or reinvest my income for additional wealth compounding. Withhold dividends, and I will be only too happy to withhold my capital."
Source: Morningstar
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