It's all about the dividends

Dividends have gone from being an afterthought to one of the top things on many investors' minds. These periodic payments by companies to their investors are taking an oversized role in the markets. Given the stock market's disappointing performance last year and lackluster targets for 2012, investors are happy taking what they see as a safer bet. That craving for dependable, albeit not guaranteed, dividend income could continue, given that interest rates remain low, analysts say.

"People are throwing in the towel on the horse race," says Jack Ablin of Harris Private Bank. "They want a dividend program that can deliver." Dividends were the sole source of return for many stock investors in 2011. The 2.1% total return by the Standard & Poor's 500 last year was entirely due to the 2.1% dividend yield, says S&P Capital IQ. That's the highest contribution of dividends to investors' total return since 2008, when the stock market's 38.5% decline was partly offset by a 1.5% dividend. Dividends were the biggest contributor to investors' total returns since at least 1988 if years the market fell are excluded.

Source: The Tennessean

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