Dividend-stock guru Jeremy Siegel, a professor at the University of Pennsylvania's Wharton School, has calculated that dividends, assuming they are reinvested in the stock, account for 97% of historical stock market returns. If you're at or near retirement, dividends offer you a stream of recurring income without tapping into your principal.
Many companies paying dividends are large-cap high-quality concerns, such as utilities and consumer product companies. That makes them simpler for individuals to understand than high-flying growth companies. "It's much easier for an ordinary investor to figure out what's going on with a utility than a biotech company," says Josh Peters, director of equity income strategy for Morningstar research firm in Chicago.
Source: Fox Business
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