An investor’s objective is to find a way to reliably compound wealth over the long term, which is not as difficult as it might seem. Dividends are credited with contributing nearly a third of total equity returns since 1926. What’s more, they account for nearly half (46%) of the total return for the S&P 500 Index between 1989 and 2014.
With this in mind, it should come as no surprise that investing in America’s finest dividend-paying companies and sticking with them has provided inflation-beating returns over the long term. To confront the concerns about entering a volatile market at what might turn out to be the wrong time, you might utilize a strategy of dollar-cost averaging into a diversified group of high-quality, dividend-paying companies. An easy way–and probably the best way–to implement this strategy would be to invest directly through company-sponsored dividend reinvestment plans (DRIPs).
Source: Forbes
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