With the increase in market volatility over the last month, and mostly on the downside, dividend payers, on average, lost half as much as the non payers according to Standard and Poor's. S&P notes:
The dividend, to some extent, acts like an anchor, slowing the stock movement down since there is an actual cash payment. That means swings in these stocks prices, during both good times and bad, aren’t as dramatic as their non-dividend paying peers.
- Payers did 2.24% better per year compounded than the non-payers.
- Translated from an initial investment of $10,000, non-payers would now be worth $262,237 vs. a worth of $451,458 for the payers, a difference of 72%.
- The difference between the payers and non payers is 2.24%, which is the dividend yield.
Payers Pay ($)
Standard & Poor's The Outlook
By: Howard Silverblatt and Beth Piskora
August 29, 2007