1.       Aggressive, growth oriented investors use them to 'hedge' their portfolio.
2.       Retirees use them to supplement existing income.
3.       Conservative investors use them to focus on maximizing long-term growth.
 
GET PAID TODAY

 

In our current bear market, wouldn't it be nice to know that the companies you own are giving money back to YOU, the shareholder?   This type of dividend payment is a great way to get paid now while waiting for your stocks, as a whole, to grow.
 
OR TOMORROW

 
Then again, simply reinvesting any dividends you gain can lead to exciting results.

In his article, "Dividends and the Three Dwarves," in 2003's Financial Analysts Journal, Robert Arnott looks at the components of equity returns for the 200 years preceding 2002.  His conclusion is that dividends are far and away the main source of the real returns from stocks.  In fact of the 7.9% return in stocks, 5% came from reinvested dividends, 1.4% from inflation, 0.6% from rising valuation levels and 0.8% from growth in dividends   Now there's some serious earnings!

And what about the evidence displayed in, "The Triumph of the Optimists: 101 Years of Global Investment Returns" by authors Elroy Dimson, Paul Marsh and Mike Staunton?   Examining contributions to total returns through capital gains and dividends over a 101-year period, they found that a stock portfolio with reinvested dividends would have generated nearly 85 times the wealth generated by the same type of portfolio focusing solely on capital gains!
 
Still think dividend-paying stocks are boooriing...?
 
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