This time I'll let someone who says it so much better than I do convert you! Everything Jerome taught us is there, in black and white. I'm giving you here a condensed translation of an article by Janice Revell that appeared in the European edition of Fortune Magazine on June 16, 2014. Please also consider that this article has a North American bias.
Lesson 1: dividends from companies with growing dividends are the ideal long-term investment.
Lesson 2: High and/or growing dividend stocks are soaring in price as investors seek yield that is not found in bonds. The FTSE High Dividend Yield Index that tracks these stocks has gained 3.3% (S&P 500 vs. 1.9%) since the beginning of the year.
Lesson 3: the stocks that gained the most were utilities (water-gas-electricity) and real estate funds (double-digit growth).
Lesson 4: Since stocks are expensive, it is better to look for those with a history of dividend growth.
Lesson 5: Evidence shows that investing in dividend-growing stocks is a good strategy: From 1973 to 2013, dividend-paying stocks in the S&P500 generated a total return of $9.3% per year, compared to $2.3% for non-dividend-paying stocks.
Lesson 6: on the other hand, the securities paying the highest dividends had a yield of 1.5% lower than those whose dividends were certainly lower but increasing regularly: the reason is simple, the very high dividends reflect above all a very low price due to fears about the company.
J&J (JNJ) has increased its dividends for 52 consecutive years and has a yield of 2.8% (note: it is in Jerome's portfolio). An investment of USD 1000 in J&J in 1980 would be worth, dividends reinvested, USD 94'000 today! And the most incredible, a third of this yield is due to dividends alone!
There are ETFs that target these stocks: ProShares S&P 500 Aristocrats, the 54 companies that have increased their dividends for 25 consecutive years. It contains: J&J; Exxon Mobil (XOM) and Procter & Gamble (PG).
Source: http://fortune.com/2014/06/02/stocks-dividend-payout/
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Good morning!
Excellent article!
The dividend is undoubtedly an important element in the return obtained by an investor over the long term. On the other hand, although I like to receive a regular and growing dividend, it is not a primary criterion for selecting the companies in which I become shareholders.
I like to become a shareholder of a company that has high growth prospects, say greater than 15% for several years. Most of the time, a fast growing company will not pay a dividend, simply because it must reinvest all the excess funds generated in the operations of the company to maintain its high level of growth.
Martin
http://www.investir-a-la-bourse.com
"ProShares S&P 500 Aristocrats" excellent, I had never heard of it! Without necessarily buying it, it must be a good benchmark of yield stocks to know.
@Martin: I agree, although my great discovery when reading Warren Buffett's letters was that it is sometimes possible to reconcile growth AND yield (and therefore significant redistribution of profits) for companies with the famous pricing power. A company like the French Thermador falls into this rare case of a "wonderful" company.
Cedric
Recent article on dividends: http://lecanarddubusiness.com/qu-est-ce-qu-un-dividende-sain/