In the decade that ended Dec. 31, 2010, the Standard & Poor's 500 dropped 4.7 percent. Yet if dividends are included, the stock index returned a positive 15 percent. Such is the appeal of stocks that pay their shareholders each quarter. Even if stock prices stagnate, dividend stocks provide income--usually more lucrative, if less secure, than bonds, which sport record-low interest rates.
Since 2001, Robert Shearer has managed the BlackRock Equity Dividend Fund (MDDVX), a $14.2 billion fund started in 1988. Every stock in Shearer's fund must pay a dividend, even if it's small. "We like the discipline a dividend instills on company management," he says. Shearer points to data showing dividend-paying stocks outperforming both the broad stock indexes and non-dividend-paying stocks over the long term.
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