“You need to pay more attention to dividends — this math shows why they beat inflation”
April 20, 2022
“…Most investors pay little attention to them. Because the stock market’s dividend yield in recent years has been at record low levels, traders interested in turning a quick buck aren’t interested. The financial media doesn’t help matters much, since dividends typically don’t change very much from quarter to quarter and are therefore considered boring.
Yet it’s precisely their boring nature that makes dividends attractive. Because companies are loathe to cut their dividends, their yields will increase during bear markets. A steady stream of dividends goes a long ways toward giving us the discipline and fortitude to hold on to stocks through a downturn…
…When focusing on all rolling 12-month periods since 1940, the S&P 500’s SPX, 0.14% earnings per share have been 10 times more volatile than dividends per share (DPS), as this chart shows. So if you’re looking for something to invest in that helps you sleep through the night, a strategy centered on dividends makes sense…”