Dividend Stocks Are The Best Stocks

In “The Future For Investors,” Siegel discusses how dividends are “bear market protectors” and “return accelerators.” He gives as an example the Great Depression of the 1930s. The Dow Jones Industrial Average reached its peak price on September 3, 1929 and didn’t hit that level again until November 24, 1954 – more than 25 years later. Zero price appreciation for 25 years. Stocks were the worst place to be during this period, right? No way. An investor who bought the stocks in the index at the peak in September 1929 and reinvested dividends actually made more than four times his money -- a positive return of more than 6% per year during this 25-year period! This is more than twice what an investor who sold stocks in 1929 and bought bonds made and four times what an owner of treasury bills made.

Reasons for Dividend Stock Outperformance. The question remains why do dividend-paying stocks exhibit such superior investment qualities? There are a number of reasons:

Source: Investing Daily


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