Stocks That Go Up Or Stocks That Pay Dividends???Submitted by William Allan Financial Services, LLC on September 19th, 2017
When it comes to investing, everyone’s goal should be the same… Grow your capital! Naturally, most people would assume to achieve said goal, you need to invest in companies who’s stock price consistently goes up. As the great Lee Corso would say… “Not so fast my friend.”
As with many aspects of investing (particularly stock market investing) 1) great clarity can be gained by knowing historical facts and 2) these facts are generally, not the greater population’s assumption. The above chart is proof! From 1930 – 2015, the percentage of the total stock market returns that is the result of dividends is 43%. Amazing when you consider the infatuation people have with finding stocks that grow via price appreciation.
It may seem boring, but dividends (for many companies) are a steady growing component of how they return value to their shareholders. Now knowing these dividends make up close to half of the stock market returns, rather than being an afterthought, dividends may (and should be) a leading requirement when making an investment decision. Food for thought!
Note: The 2000s were considered the “lost decade” with no stock appreciation, so needless to say dividends made up more than 100% of the total returns.