August 10, 2016

Dividends have been on the rise since the end of the financial crisis, and growing and paying dividends has been a very important theme throughout the recovery. As bond yields plummeted and stayed near historic lows, there has certainly been a dividend renaissance across the investment community. Yet the power of dividend investing is not a recent phenomenon by any means. Dividends have been a powerful tool throughout history, accounting for 43% of the overall market return of the S&P 500 since 1930 (Source: Ned Davis Research).

Dividends can be a powerful tool, not only for income, but for an indication of company health. Dividends also account for over 75% of total return in lower growth periods such as the 1940’s and the 1970’s (Source: Ned Davis Research). In fact, the S&P has grown its dividends in 40 of the last 43 years since 1973 (Source: S&P Capital IQ, Reality Shares Research). Currently, 83% of companies in the S&P 500 pay dividends—a number that has steadily increased since 2008. While dividend investing has regained popularity in the last few years, accessing the right aspects of dividend growth is certainly more challenging than just allocating to large-cap stocks. It’s not just about the rear-view mirror, finding the companies with the highest yield or those that have paid and grown dividends historically. The ability to pinpoint and access the future of dividend growth is more important than ever today.

Past performance does not guarantee future results. Source: S&P Capital IQ, Reality Shares Research.

By taking a forward-looking approach to dividend analysis, investors can seek to outperform the market by investing in the healthiest companies on the market. Please see our whitepaper, The Reality of Dividend Growth Investing: Accessing the Future of Dividend Growth, for more information.

S&P 500: A broad stock market index of 500 large companies based on market capitalization.