Benefits of Dividends
Jeremy Siegel talks about the virtues of owning dividend-paying stocks in a bear market. Those dividends (if reinvested) buy more and more stock as a company's stock price declines. When the stock price rebounds, those extra shares-from-dividends act as "return accelerators," leaving you in a much better position than where you started, even if the ending stock price is the same as it was before the bear market.
On Sept. 3, 1929, the Dow Jones Industrial Average hit 381 -- and it did not reach that level again until November 1954... [T]he average stockholder who reinvested his or her dividends actually showed a positive return of more than 6% per year during that 25-year period, easily beating the performance of bonds and short-term treasuries...
It's quite a case for evaluating your portfolio and looking for dividend-paying stocks, if you believe we're in store for a bear market someday. By the way, the article also stipulates that dividend-paying stocks are good in bull markets as well.
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What are your thoughts on DVY (dividend ETF)?
