Are Dividends the Answer to Growth for Income Hunters?

Dividend focused strategies as well as strategies offering exposure to alternative income sources have become popular and proliferated over the past few years given the low interest rate environment.  Throughout history, dividends constitute an important part of total equity return. In decades such as the 40s and the 70s, dividends constitute 50% or more of the equity markets returns whereas during the 90s, dividends made up only 14% of the total return with capital appreciation making up the rest.  In addition, academic research has shown that dividends offer protection during bear markets.  It must be noted that, while dividends offer benefits, not all dividend strategies or dividend indices are constructed the same.  Some indices are designed with the specific purpose of absolute high yield, some focus on stable, consistent dividend growth and others encompass a bit of both.  Nearly all dividend indices employ quality measures to ensure their objectives are achieved.  During our webinar this Thursday on dividends, we will breakdown the methodology construction behind several leading dividend indices as well as highlight how different index mechanics can lead to different risk/return profiles and sector compositions.

The posts on this blog are opinions, not advice. Please read our disclaimers.

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