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The long-term power of dividends

Posted September 15, 2011 at 2:23 am

by Jeff Bailey
 
No telling for sure as of this writing whether President Obama will get his jobs bill passed; whether the legislation would actually do much for the economy if it does become law; or whether the stock market would get excited even if a jobs law did revive economic growth.

With all those ifs and more, it’s easy to make the case for a sideways-at-best equities market in coming months. If that’s so, what to do?

Focusing on dividends is never a bad idea. Rocket-like stock appreciation is always sexier, of course, and who doesn’t like the trajectory of this chart of Amazon’s mobile porn tube (AMZN) market cap?

But thankfully many smart market commentators have in recent months pumped out persuasive articles on the power of dividends. We all know payouts are important, but being reminded helps encourage us to keep hunting for dividend-paying companies.

Ben Baden at U.S. News argues that dividends represent the bulk, over time, of the return one sees in the S&P 500, far more than stock price appreciation. He also notes, in this primer, that dividend-paying companies tend to have solid balance sheets, and thus can withstand tough times.

Dividends are so powerful in [continue]…

 

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