Dividends are key with economy in limbo

Recently Peter Gibson, the head of portfolio strategy and quantitative research at CIBC World Markets, has imagined a future without growth. The U.S. economy is in limbo, he wrote in a report this week, so “equity returns are likely to remain low over the next two to five years.” Without stable growth, stock prices won’t rise, and without price appreciation, investors earn little return – capital gains – on their investments.

Mr. Gibson now fixates on dividends. Equity markets may have rebounded from their March, 2009, lows, but “it’s going to be supercritical to start focusing on yield,” he said in an interview. Nothing puts this into perspective better than the S&P 500’s performance over the past 12 years. This exchange gauges Americans’ wealth and in July, 1998, it hit 1,125. Today, it hovers around 1,100. That means many U.S. investors are no better off than they were a decade ago.

Source: Globe and Mail

Related Articles:

• Why We Are Dividend Growth Investors
• What Would Warren Buffett Do?
• Increasing Dividend Yield Part V: MLPs
• When Is Enough, Enough
• 7 Low-Debt High-Rated Dividend Stocks