7 Dividend Stocks You Can't Ignore Right Now
Yes, I'm talking about 2011, a year when the broad market effectively closed flat on the year. That means that dividend companies could have meant the difference between making gains last year or ending things in the red.
That's a pretty strong reason not to ignore dividend payers right now.
While there's been talk of a "dividend bubble" in the last few months, there's little reason to believe that dividend stocks are getting overblown. After all, those dividends are being supported by record cash holdings and record profits, and the dividend yield for the S&P 500 still remains high by historic standards. Couple that with a payout ratio that's still low by historic standards, and it suddenly becomes pretty hard to make a case for a dividend bubble.
The study I mentioned isn't the first time we've seen evidence that dividends go hand in hand with higher capital gains. In fact, that's been the case historically:
Over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while doling out cash to their shareholders, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.