The Highest-Yielding Dividend Stocks Deliver The Best Capital Gains

One thing that can be seemingly counterintuitive is the notion that the companies that pay out the highest amount of dividends can also deliver the greatest amount of capital gains as well. According to Steve Johnson's individual research which also acknowledges the work of Professor Jeremy Siegel, we can see the following:

"The top quintile [of dividend-paying stocks] returned 13.8 per cent a year since 1994, with a deviation of 15.4 per cent, against a return of 12.4 per cent and a deviation of 25.3 per cent for the bottom quintile. The research echoes the findings of Jeremy Siegel, professor of finance at the University of Pennsylvania's Wharton School. In his book "The Future for Investors", Mr. Siegel demonstrated that an investor who purchased the 20 highest-yielding stocks in the S&P 500 every year from 1957 to 2004 would have outperformed the market by 3 per cent a year. Indeed, the S&P Dividend Aristocrats Index, which features 57 companies that have increased their dividend annually for the past 25 years, has outperformed the S&P 500 by 6 per cent a year since 1969."

Source: Seeking Alpha

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