Dividend Stocks Shoveling Cash to Shareholders

The trickle of dividend increases this earnings season is turning into an outright stream: all told, almost 60 firms announced dividend hikes in the last week. That's an important shift right now for investors. That's because dividends historically dictate a lot about a company's overall gains. With the S&P 500 now well into positive territory for 2011 thanks to yesterday's mammoth gains, it'd be easy for investors to mentally eschew dividends in favor of capital gains. But that's a big mistake.

You see, dividends and capital gains aren't mutually exclusive -- in fact, they're two sides of the same coin. Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.

Source: The Street

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