Dividends have accounted for over 40% of total returns for stock market investors since 1930.
Oppenheimer’s John Stoltzfus and Matt Naidorf argue that dividend considerations should be a “central component of the investment process.”
In a recent report to clients, the analysts note that it’s a mistake to assume that only mature non-cyclical companies pay dividends.
“Of the 500 current members belonging to the S&P 500 index, 411 currently pay a regular dividend (82.20%),” wrote Stoltzfus. “Even smallcap companies, which are traditionally viewed as incipient firms in high growth areas, often pay dividends. Among the 1,978 current members of the Russell 2000 Smallcap Index, 41.15% currently pay regular dividends.”
It used to be that tech companies were not known for paying dividends because they were too busy reinvesting any extra cash into growth projects.
But that no longer is the case.
“Investors might be surprised to see that 64.29% of information technology companies pay a regular dividends, and among those payers the current average yield is 2.27%—higher than the comparable yield for all other cyclical sectors and even higher than healthcare, a classic defensive,” said Stoltzfus.
Here’s a sector by sector breakdown of dividend profiles based on recent data.
Check out the rise of dividends as the stock market fluctuated.
“The 10-year inflation-adjusted CAGR (compound annual growth rate) of dividends paid by the index is 4.33%,” Stoltzfus added.
Business Insider Emails & Alerts
Site highlights each day to your inbox.