Stocks with Dividends You Can Depend On

n 1929 the S&P 500 reached an all-time high of 333.8 - three years later and the market had crashed more than 50% down to 133. It took the market until 1956 to reach that high again. However, if dividends were reinvested throughout that whole time frame, an investor would have seen a return of nearly 100% over the same time period! Without dividends, the return would have been zero. The same can be seen in the market from 2007 to 2012. The S&P 500 declined 22% over this period, but with dividends re-invested an investor would have seen their portfolio decline by only 11%.

Re-investing dividends in order to achieve market-beating returns will only work if the payouts continue, and that means that the company has to have a sustainable free cash flow, with plenty of room for sudden financial shocks or a resistance to the general economic situation, such as Chevron (NYSE: CVX), Dr Pepper Snapple (NYSE: DPS) and McDonlalds (NYSE: MCD).

Source: Motley Fool

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