Overview
- Over the past five decades, dividend-paying S&P 500 companies returned 9.2% annually on average, versus 4.3% for non-payers, according to Ned Davis Research and Hartford Funds data.
- Dividend growers and initiators delivered the strongest results at 10.2% average annual returns, while cutters and eliminators lost 0.9% on average.
- The data show that prioritizing dividend growth outperformed strategies centered on maintaining the same payout, which averaged 6.8%, and the equal-weighted S&P 500, which averaged 7.7%.
- Beginning investors are cautioned not to chase high yields, since unsustainable payouts often translate into weaker total returns.
- At a 10.2% average annual return, a $12,500 starting investment could grow to $1 million in under 46 years, and long-tenured Dividend Kings exemplify decades of steady payout increases.