Friday 9 September 2016

‘Dividend Aristocrat’ stocks post almost double the returns of the S&P 500 in 2016

Boards of directors that consistently reward investors with higher dividends don’t get enough praise.

While Amazon AMZN, -0.05% Oracle ORCL, -1.28% and Facebook FB, -0.60% are lauded for their genius-level CEOs and innovative business models, companies that keep raising dividend payouts year after year really enrich investors in the long run, and can be excellent performers within a diversified portfolio.

U.S. companies that have raised their regular dividends on common shares for at least 25 years are included in the S&P 500 Dividend Aristocrats Index SPDAUDP, -0.53% It doesn’t matter how high a stock’s current yield is, just that the dividend continues to rise. Beloved Aristocrats include real estate investor HCP Inc. HCP, -1.81% soft-drink giant Coca-Cola Co. KO, -0.02% and pharmaceutical company AbbVie Inc. ABBV, -1.40% So even though investors tend to think of dividend stocks as vehicles for income, the Aristocrats have been a fantastic vehicle for growth. So far this year, the dividend index has returned 14.1% (with dividends reinvested), compared with 8.3% for the benchmark S&P 500 Index SPX, -0.22% — that’s almost twice the increase.



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