History backs dividend investors

Investors chasing dividends in these uncertain economic times have history on their side, CIBC World Markets says. Stocks surged in September, senior economist Peter Buchanan said in a research note, adding that “yield is still very much the name of the game though, and it will take more than one good month to reverse investors’ recent preference for ‘clipping the coupon.’”

“Those betting that dividend stocks will provide a useful portfolio anchor in that sort of environment have history as an ally,” he said. “On both sides of the border, dividend-paying issues have fared better over the medium term than those with low or zero payouts. The gap has been the widest in a period of subdued economic performance.” Since 1990, Mr. Buchanan’s research showed, “quality” U.S. dividend stocks have outpaced the S&P 500 by more than 9 percentage points, on average and annually, in years of economic growth below 2 per cent. That compared to a deficit of a “modest” 2 percentage points when expansion topped that mark.

Source: CTV

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