One of the best things about investing on Wall Street is there’s a strategy that can satisfy everyone. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, pathways exist for investors of varying risk tolerances to grow their wealth over time.
But among these seemingly countless plans of action, buying and holding high-quality dividend stocks is a tough strategy to beat. Recently, the analysts at Hartford Funds, in collaboration with Ned Davis Research, updated their data sets for a lengthy report (“The Power of Dividends: Past, Present, and Future”) they issued last year that examined the outperformance of dividend stocks over the long run.
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According to the report’s findings, dividend-paying companies delivered an average annual return of 9.17% over a half-century (1973-2023), while being 6% less volatile than the benchmark S&P 500. To add, public companies that initiated and grew their payouts returned an even more impressive 10.19% on an annualized basis over 50 years, with 11% lower volatility than the S&P 500.
On the other side of the coin, publicly traded companies that don’t offer a payout trudged their way to a more modest 4.27% annualized return between 1973 and 2023 and did so while being 18% more volatile than the S&P 500.
Companies that regularly pay a dividend are typically profitable, time-tested, and capable of providing transparent long-term growth outlooks to their shareholders. In other words, they’re just the type of businesses that are expected to increase in value over an extended timeline.
As we steam ahead into May, two ultra-high-yield monthly dividend stocks, with an average yield of 8.29%, are attractively priced and begging to be bought by opportunistic long-term-minded investors.
Time to pounce: Realty Income (5.75% yield)
The first high-octane dividend stock worth pouncing on in May is none other than the premier name among retail real estate investment trusts (REITs), Realty Income (NYSE: O). The REIT has made 646 consecutive monthly dividend payments to its shareholders…
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