Over the last 50 years, the highest 20% yielding stocks in the S&P 500 returned 14.2% annually. That's good enough to double your money every five years - or quadruple it in 10. And if you were even more selective, say investing only in the 10 highest-yielding stocks of the 100 largest companies in the S&P 500, your annual return would have been even better, 15.7%. This is where investors planning for retirement should be putting their money to work today.
After all, bonds - which should carry a warning label at the moment - are sporting record-low yields. (And their market value will decline as interest rates rise.) Money market funds pay less than one-tenth of 1%. But many dividend-paying stocks are reasonably valued and will boost their payouts substantially in the years ahead. Over the past 50 years, the S&P 500’s dividends have grown an average 5.7% a year, well ahead of the average 4.1% inflation rate. The key for retirees is this creates an income stream that is growing faster than inflation, maintaining and increasing your purchasing power.
Source: Investment U
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