Taylor noted that Intel now pays a 4 percent dividend after increasing it 15 percent in the last month. And Microsoft announced this week a 25 percent dividend boost, bringing it to 3 percent. Cisco is a bit of a latecomer, he says, making its first 1.5 percent dividend payments this year.
Dividend-paying stocks are the “decathletes of the equity market,” says Fidelity's Offen. “They don’t usually come in first in any one event. But as an asset class they have tended to be consistent—and that consistency can help them win over the long term.”
According to a December 2010 Fidelity Viewpoint newsletter , growth in dividend payments often tends to be more reliable than earnings growth. Since 1946, dividend growth rates have had a standard deviation of 6 percent, compared with 16 percent for earnings growth rates.
Fidelity notes how dividend payments can help offset price declines. In the previous decade, while prices of stocks in the S&P 500 fell an average 2.3 percent annually, the index’s annualized total return fell only 0.5 percent, meaning that dividend income contributed 1.8 percentage points a year to the total return.Page 5 of 6 | Prev Page | Next Page