Here is an interesting excerpt from an article by Gilles Coville in "Les Echos.fr" :
"The focus on dividends is not a new fad but of an old normality”, assures David Shairp, strategist at JP Morgan AM. The stock market decade "lost" 2001-2011 can be seen as a transition between two paradigms. During the 1990s, the contribution of dividends had fallen to its lowest level since the end of the 19th century. e century: barely 20 % of the total return for the shareholder, against 80 % for capital gains.
Looking at US stocks over rolling fifteen-year periods, statisticians estimate that until the 1950s, dividends most often provided between 50 and 100 percent of performance. Today, with a backdrop of weaker economic growth, multiple geopolitical uncertainties, and dissuasive price volatility, investors are nostalgic for this golden age and must favor companies of the highest possible quality, which keep their promises, particularly dividends.
Since it is paid in cash, it remains the most credible trace of the reality of profits, beyond any accounting subtleties. For increasingly internationalized groups, this also makes it possible to verify that the cash flows generated locally go back to the parent company. When a board of directors imposes itself to increase its dividend each year, it forces its executive to a more balanced strategy between risk-taking and time horizon. Ultimately, the approach reaches shareholders with different profiles, more sensitive to regularity than to speed, more attached to the full return on investment in the long term than index trend hunters.
Source: http://www.lesechos.fr/opinions/analyses/0201908874209-dividendes-le-inverse-aux-sources-292751.php
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