Published Thu, 14 Jun 2018 11:40:35 -0400 on Seeking Alpha
Numerous studies have indicated that dividend paying stocks perform better over the long term than stocks that don’t pay dividends. However, that is a small consolation for investors that have suffered capital losses on their high yield dividend payers over the past 18 months. We consider the current environment and suggest a course of action.
Tough going for the dividend favourites Despite the stellar longer-term performance of dividend-based investment strategies, the dividend favourites have struggled over the past 18 months in the U.S. and other major markets.
Total Return YTD
Total Return since 1 Jan 2017
SPDR S&P Dividend ETF (SDY)
Vanguard High Dividend Yield ETF (VYM)
Utilities Select SPDR ETF (XLU)
iShares US Telecoms ETF (IYZ)
Source: Reuters; priced on 11 June 2018
The table indicates the lagging short term performance of various ETFs that hold the typical investor dividend paying favourites. We compare that to the broader U.S. market on a total return basis (capital appreciation plus dividend income).
Total returns vary among the various strategies represented by the ETFs in the table; however, it is clear that stocks selected for income, underperformed the broader U.S. market considerably over the past 18 months.
Higher interest rates create alternatives for income seeking investors... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|SPDR S&P DIVIDEND ETF||100.02||0.0||0.00||1.81||1.82|
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