High Dividend Stocks

High Dividend Stocks

High dividend stocks seem to be the best alternative for income seeking long-term investors. Ten-year U.S. treasuries now yield below 2% per year. This will probably end up being less than average inflation over the next 10 years. That's why reasonable investors are starting to consider investing in high dividend stocks. Investing in high dividend stocks has been more profitable than investing in index funds over the past 80 years. Insider Monkey did an analysis titled High Dividend Stocks which showed that high dividend stocks managed to beat the market by 1.3% per year on the average. This is nothing to sneeze at.

High dividend stocks are usually less riskier than the broader market. They operate in mature businesses where profits and sales are more robust. Most of these industries are resistant to recessions. That's why this year high dividend stocks are outperforming the market.

Another good thing about high dividend stocks is they tend to boost their dividends over the years. So investors who were initialy attractedby 5-6% dividend yields may end up getting 10% yields after 10 years or so.  Here is what Insider Monkey says:

High dividend stocks not only managed to outperform the market by 5.4 percentage points per year, they had higher returns in 11 of the 13 years. The worst annual return of high dividend stocks was -6.7% vs. -11.2% for the market. High dividend stocks provided protection when the market was down. They beat the stock market in all down years. They also beat the stock market every time the stock market increased by more than 20%. If the stocks repeat the same pattern in the following years, investors chasing high dividend large cap companies will manage to beat both the bond and stock markets by a large margin. That’s why we like high dividend stocks.