Dividend-paying stocks have always found a home in portfolios, especially after a bear market, when investors want a reliable source of income. A good way to gain exposure to the variety of dividend-paying companies out there is through a dividend exchange traded fund (ETF).
“After a bear market, people get nervous and concerned,” remarks Howard Silverblatt, Standard & Poor’s senior index analyst, and investors are seeking shelter by turning to dividend stocks, reports Josh Lipton for Minyanville. [Dividend ETFs: Aristocrats vs. Achievers.]
The decision to turn to dividend stocks makes sense since dividend payers tend to outperform non-dividend payers over the long-term, Silverblatt adds. For instance, if an investor put $10,000 in two portfolios covering the S&P 500, one with dividend payers and one without, in 1979, the dividend-paying portfolio would be now worth $348,879 while the non-paying portfolio would be worth $232,368. [What You Should Know About Dividend ETFs And Taxes.]
Dividend payers keep a portfolio less volatile over the long haul since they don’t surge during good times or implode during down times.