Dividends4Life: Why Are You Ignoring These High-Dividend Stocks?

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Why Are You Ignoring These High-Dividend Stocks?

Posted by D4L | Tuesday, September 03, 2013 | | 0 comments »

"The deepest sin against the human mind is to believe things without evidence."
-T.H. Huxley. Why are high-yield portfolios dismissed as inferior to their growth counterparts by so many investors? The lure of high-returns seems to always trump the steady growth of blue-chip dividend stocks in the mainstream media. Could it be that investors are taught that increasing dividend yields mean lower portfolio returns? Or that dividend payments mean that management believes the company is finished growing? Both couldn't be further from the truth.

Look no further than the oft-mentioned "Dogs of the Dow" to disprove the ill-informed opinion towards high-yield investing. The Dogs of the Dow is a simple, yet highly effective investment strategy that buys and holds equal dollar amounts of the 10 highest yielding dividend stocks in the Dow Jones Industrial Average (DIA). Investors buy into the high-yielding dividend stocks at the beginning of each year. They then adjust holdings annually to include the 10 highest yielding stocks in the Dow. Simple right? But more important than the strategy's simplicity are the overall returns. Over the last 25 years, the Dogs of the Dow have compounded at an annual rate of 18.0%. And this outperforms the Dow and the majority of money managers by a healthy margin.

Source: NASDAQ

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