Another Chance At Choosing Stocks With Dividend Appeal

Another Chance At Choosing Stocks With Dividend Appeal by John Dorfman, Dorfman Value Investments

The past two years have been rough for dividend-paying stocks. Investors kept expecting the Federal Reserve to raise interest rates. The mere threat of a rate increase hurt dividend-paying stocks, which compete for investors’ money with fixed-income vehicles such as bonds and bank certificates.

In the long run, however, dividends are an advantage, not a disadvantage. A study of returns from 1928 through 2013 by Kenneth French and colleagues from the University of Chicago found that dividend-paying stocks offer total returns about 2 percentage points better than non-dividend payers.

Triumphs and Tragedies

When I look for stocks with dividend appeal, I want to see an above-average dividend...