According to Ned Davis Research , during periods of market decline between 1972 and 2010, dividend payers outperformed non-dividend payers by 1.5% per month.
that means the difference between turning a $100,000 portfolio into $2.4 million versus just $174,000.
- · There is a direct correlation between high dividend yields and attractive total returns."
- · High dividend yield stocks were also less volatile in terms of the standard deviation of returns."
- · high dividend yield stocks outperformed other value strategies as well as the overall stock market return in declining markets."
compounding returns over long periods of time. Long-time dividend investors are surely on board with Albert Einstein, who supposedly called compound interest "the most powerful force in the universe."
Franking Credit advantage:- What that means is that a 6% term deposit provides a significantly inferior after-tax cashflow to a 6% dividend yield.
In the US, a dividend yield (the annual dividend divided by the share price) of 2.5% to 3% is considered quite good. In Australia, sustainable yields of 5%, 6% and 7% are quite common.
Well-chosen shares can deliver something that a bank account can never offer - growth.
3 interesting stocks
Telstra (ASX: TLS)
A nationally dominant telecommunications carrier with almost universal brand recognition. A business that has been revitalised through new management, that has been refocussed on the customer, and one that is likely to receive $11 billion (in net present value terms) from the government for giving up some of its infrastructure.
Overall, though, Telstra is doing the right things to shed (or have taken from it) the low-growth and perishing legacy businesses. The directories (phone book) business can't be long for this world, and the Trading Post is now purely digital. The NBN will assume Telstra's fixed broadband business.
Telstra's dividend is almost the stuff of legend these days. The holy grail that is the 28-cent-per-year payment has almost become seen as a divine right - and would only be lowered by management as an absolute last resort, such is the expectation of its retail shareholder base.
Telstra has come a long way since March 2012 when the share price was $3.25, and even further since its shares changed hands for under $2.60 in late 2010. The share price has been on a stellar run since then -
Thorn Group (ASX: TGA)
You've seen the 'Rent, Try, $1 Buy' ads from Radio Rentals (and Rentlo in South Australia), and Thorn Group is the company behind them.
For many Australians, buying whitegoods (like fridges and washing machines) or browngoods (televisions and the like) outright is often too expensive or inconvenient - and that's where Thorn comes in.