Many investors prefer dividend-paying stocks, especially people who take an income, or cash flow, approach to investing -- as opposed to a total return approach, which I believe is the right approach. However, new research from Dimensional Fund Advisors shows that investors who expect dividends to protect them in tough times might be in for a rude awakening. The current era of historically very low yields on safe bonds has attracted many new adherents to the strategy of favoring dividend-paying stocks, especially the stocks of companies with either high or rapidly growing dividends.
Today, we'll take a look at the findings of a March 2013 study, "Global Dividend-Paying Stocks: A Recent History," produced by the research team at DFA. The study covered 23 developed markets over the period 1991-2012. According to the analysis, the average annual returns were 9.1 percent for dividend-paying stocks and 11.1 percent for nonpayers. However, the returns of nonpayers were more volatile than for dividend payers. The net result was that the annualized returns were the same 7.6 percent. However, by focusing on only dividend payers, an investor would exclude about 40 percent of firms, thereby sacrificing some diversification benefit.
Source: CBS News
Related Articles:
- Defined-Benefit Pension Plus Dividend Stocks For A Prosperous Retirement
- 5 Dividend Stocks To Buy And Hold, Not Buy And Forget
- Asset Allocation For Income Investors
- 8 Stocks With Strong Dividend Growth Metrics
- 10 Dividend Stocks Balancing Yield And Growth
________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
When looking for dividend stocks to invest in, it is advisable to choose companies that have strong dividend histories and stable balance sh...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.