Dividends Stocks Still The Best Investment Strategy

Stocks, during the last six years have been, shall we say, . . . unpredictable: surging bull market in 2007, bear market retreat in 2008-2009, then a powerful bull market over the last three years. As we celebrate the surprisingly good performance of stocks in 2012, we are now being buffeted by the annual year-ahead prognostications of the financial media and Wall Street strategists. Will they be any better at predicting 2013 than they were at predicting 2012? I don't think so. Indeed, who correctly foresaw the wild ride we have been on over the last six years, ten years, twenty years etc? Nobody I know. That is the reason I became a dividend investor approximately twenty years ago.

It was then that I first learned that dividends had produced nearly 50% of the total return for stocks since the end of World War II. I also discovered that dividend growth was only about one-third as volatile as earnings or prices, and thus were far more predictable than either. In summary, dividends offer a cash return, they generate half of the total return of stocks, and dividends are among the most predictable financial data for many companies because dividends are set by the board of directors.

Source: Rising Dividend Investing

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