Even during prolonged rallies, dividends still represent a decent chunk of overall returns in the stock market.
“It’s important to understand that it’s not the very highest payers you want — many high-yielding stocks got there the hard way through share price declines,” according to the Reformed Broker report. “Nominal yields alone are not the story.”
Also, it’s not just high dividend payers that you should be looking for, it’s companies that are growing their dividends at high rates that really amp up performance, the blog adds.
In ETFs, Vanguard Dividend Appreciation ETF (VIG) tracks the Dividend Achievers Select Index, which was created by Mergent. The benchmark follows U.S.-listed companies that have increased their annual regular dividends for at least the past 10 consecutive years.
Chart source: PIMCO via Reformed Broker