Dividend stocks are considered more stable than those that do not pay dividends because they provide money to investors even when their share value declines. A steady income stream is delivered by the dividend itself. Multiple studies show that dividend-paying stocks tend to outperform non-dividend payers by an impressive margin.
Going back as far as 1926, studies confirm that nearly half of the return on the S&P 500 was the result of dividends paid by companies included in this index. However, it is not just the return that matters. The duration of this return and the ability for it to periodically increase are also important. Investors should find dividend investments that will be reliable over the long-term.
Analysts have found at least ten companies that have paid dividends for more than a century and have increased their dividend payments for at least 20 years. This is quite an impressive feat, considering that within the past few years, many companies have cut or stopped paying their dividends. Some others who have continued theirs have not been able to increase them.
Individuals will recognize the names of many companies on this list. Though these may not offer the highest yields, they are known for their stability and reliability when it comes to dividend payments. They are: Chubb, PPG, Colgate-Palmolive, Coca-Cola, Procter & Gamble, UGI, Consolidated Edison, Eli Lilly, Exxon Mobil, and Stanley Works. This last company is the oldest dividend payer on the list and has had 42 consecutive dividend increases.
Finding a company with a strong dividend culture, such as those listed above, is important. Other factors to consider are fair value, ability to cover the dividend, and dividend fundamentals. Making a wise choice when it comes to dividend stock investments makes the investment portfolio more stable in ways other than just receiving regular passive income from dividend payments.
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Dividend investing is the only way I invest, and here's why: dividend stocks create a secure, passive income, and are less risky than non-dividend investing.
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