Over the last century, Wall Street has been a virtually unstoppable wealth creator for patient investors. Although other asset classes have helped build nominal wealth, such as oil, gold, bonds, and housing, none comes close to the annualized average returns over the last 100 years that stocks have brought to the table. With thousands of publicly traded companies and exchange-traded funds to choose from, there's an investment strategy that fits the goals and risk tolerance of just about every investor.
But among these countless strategies, few can hold a candle to the juicy returns delivered from buying and holding high-quality dividend stocks over an extended period. Last year, the investment researchers at Hartford Funds released a detailed report ("The Power of Dividends: Past, Present, and Future") that examined the many ways dividend-paying companies have outperformed non-payers over the long run. In a collaboration with Ned Davis Research, recently updated data from this report finds that dividend-paying companies have more than doubled the annual average return of public companies that don't pay a dividend over the last 50 years (1973-2023): 9.
17% vs. 4.27% .
Further, the dividend payers were, on average, 6% less volatile than the S&P 500 , while the non-payers were 18% more volatile. Perhaps the best thing about investing in dividend stocks is that value can always be found -- even with Wall Street's major stock indexes hitting fresh all-time highs. The real challenge.