3 Charts Every Dividend Investor Should See
The stock market volatility has been unprecedented.
For years now we’ve seen the market rise one day… only to fall the next. Meanwhile, events considered to be “once in a generation” — credit crises, sovereign-debt downgrades and bailouts — are now happening with surprising frequency.
But the biggest surprise? There has still been a way to make money in the market without losing sleep… without “gambling” on speculative stocks… and without seeing stomach-churning volatility in your portfolio.
So what “miracle” investment has been able to do all that in a roller-coaster market? Dividend-paying stocks.
Even The Wall Street Journal is covering the trend. Their headline says it all…
“ Stocks Become the Heroes”
– The Wall Street Journal, Dec. 19, 2011
And according to this article, in 2011 the 100 highest-yielding stocks in the S&P 500 were up an average of 3.7% — before dividend payouts — while the 100 lowest-yielders were down an average of 10%.
That performance is impressive, but buried deep within that same piece was the real reason to be excited about dividend payers — not just this year, but for decades to come.
“Such stocks could get an even longer-lasting lift as more baby boomers reach retirement age — and reduce their risk appetite. The first baby boomers turned 65 years old this year,” the article read.
Right now we’re seeing the first taste of what could be a tremendous time for dividend payers. Many investors, fed up with a wildly swinging market, are seeking shelter in more stable dividend payers.
At the same time, baby boomers are starting to look toward dividend-paying stocks to supplement their retirement income… especially when Treasury bonds yield just 2% and certificate deposits (CDs) and savings accounts pay nearly 0%.
That’s pushing dividend payers up across the board…
You can see for yourself.
In the past year, shares of Philip Morris International (NYSE: PM) — which yield 4.0% — have returned more than 30%:
“Boring” phone company Verizon (NYSE: VZ) is dominating the market, thanks in part to its 5.0% yield:
Terra Nitrogen (NYSE: TNH) is up more than 70% in the past year and pays an 8.0%-plus dividend yield:
Action to Take –> I’m not saying every dividend stock beats the market. But I could find dozens — if not hundreds — more high-yielding stocks that are topping the S&P. The trend is clear — dividend payers are one of the best places to make money in this market.
It makes sense. After all, firms that pay steady (and increasing) dividends tend to be strong, stable companies that can weather rocky environments like we’re seeing right now. These are exactly the type of stocks investors flock to during times of uncertainty.
But even in good times these stocks still see plenty of buying interest. Their high yields all but guarantee that investors will be interested — especially in a period when rates on Treasuries, savings accounts and CDs are historically low.
After all, why buy a Treasury bond yielding 2% when you can buy a high-yielder paying 8% AND beat the market?
[Note: If you haven’t already heard, we just released our newest report — “Top 5 Income Stocks for 2012.” These five select investments pay dividend yields of 7.5%… 8.8%… even 11.5%. For more details on this report and these investments, you can visit this link.]