Saturday, March 14, 2009

Dividend Cuts No Worse Than In Prior Economic Slow Periods

Investors continue to be rewarded with better risk adjusted returns by maintaining a focus on investing in dividend growth stocks. A recent report from Oppenheimer contained a Ned Davis Research chart noting the dividend growers and initiators continue to achieve higher risk adjusted returns for the period 1972 - 2008.

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risked adjusted return dividend increase stocks chartAdditionally, dividend cuts seem to be coming at a fast and furious pace. However, cuts in this cycle are really no worse than cuts in prior economic slowdowns. I saw a chart recently (can't locate the source now) that noted dividend cuts, excluding the financial sector, are no worse than prior periods as well.

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quarterly dividend change S&P 500 Index since 1944Source: Bespoke Investment Group

For investors then, continuing to focus on stocks/companies that increase the company's dividend on an annual basis can be a rewarding investment approach.


Seeking Dividend Growth Over Time (pdf)
January 26, 2009

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