Want $5,000 in Annual Dividend Income? Invest $57,000 in These Ultra-High-Yield Stocks
Although Wall Street offers no guarantees, one near-constant has been the outperformance of dividend stocks over the long run.
Back in 2013, J.P. Morgan Asset Management, a division of JPMorgan Chase, released a report that compared the performance of public companies that initiated and grew their dividends between 1972 and 2012 to publicly traded companies that didn't offer a payout. The results showed a night-and-day difference. The profitable and time-tested dividend stocks averaged an annual return of 9.5% over four decades. Meanwhile, the non-dividend-paying companies averaged a poor 1.6% annualized return over the same time frame.
However, the irony of dividend investing is that often, the higher the yield, the lower the realized return. Since yield is a function of payout relative to share price, a company with a struggling or outright failing business model might sport an ultra-high yield but be a terrible investment.
Source Fool.com
