- 8.6% Dividend Growers & Initiators -- Companies that have raised their dividends for at least five consecutive years.
- 7.6% All Dividend-Paying Stocks
- 6.0% Dividend Payers with No Change in Dividends
- -0.3% Dividend Cutters or Eliminators
- 0.2% Non-Dividend Paying Stocks
- 5.9% S&P Geometric Equal-Weighted Total Return Index
The table makes some powerful statements about stock performance over the last 36 years:
- In general dividends matter
- Consistently rising dividends matter most of all
- Non-Dividend Payers, which would include a lot of tech stocks, have had a lot of ups and downs, but after 36 years are about where they started.
- Dividend Cutters or Eliminators are to be avoided
The above returns were based on a monthly equal-weighted geometric average of total returns of S&P 500 component stocks, with components reconstituted monthly.
With all the news of companies that are cutting their dividends, you might think that a rising dividend strategy might have become obsolete. That is far from the truth. There are many high quality companies that are increasing their dividends year after year and, yet, still possess a low dividend payout ratio.
I'll have more to say about additional rising dividend companies in the weeks and months ahead.