Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
A study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
In a recent research note, the analysts at Goldman Sachs pointed out that many of the top hedge funds had been buying the shares of some of the top money center banks at the fastest pace in three years. The traders on Goldman Sachs' prime brokerage desk reported that banks and trading companies were the most bought sectors in recent weeks.
Dividend stocks provide investors with reliable streams of passive income. Passive income is characterized by its ability to generate revenue without requiring the earner's continuous active effort, making it a desirable financial strategy.
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