Soften the Bear's Short-Term Bite With Dividend Stocks

For investors, May started out as a month of great promise. On May 1, the Dow Jones Industrial Average climbed 65.69 points, closing at 13,279. Since then, however, that promise has turned to plummet. The Dow posted losses on 12 of the next 14 trading days, culminating with a drop of 46 points last Friday. In all, since May 1, the Dow has lost 6.17%. But did you know there was a way you could have avoided the bulk of the damage? All you had to do was hold the dividend stocks in the 30-stock DJIA that offer the highest current yield.

In fact, numerous academic studies have verified the impressive contribution of dividend stocks to long-term market performance. According to certain studies, dividend yields have been responsible for as much as 90% of stock returns over the past century. And Standard & Poor's reported last year that the dividend component was "responsible for 44% of the total return" of the S&P 500 over the 80 years from 1930 through 2010. That is quite impressive considering nearly a third of S&P stocks don't even pay a dividend.

Source: Money Morning

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