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%).
Worried investors concerned over the sticky inflation need to look to high-yield dividend shares in the energy, health care, and consumer goods sectors for companies that will continue to outperform in an ongoing, albeit lower, inflation environment.
The best way to beat the current persistent inflation is to invest in businesses unaffected by rising prices.
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