Thursday , 13 June 2024

Here’s Evidence That Dividends Are the Slow & Steady Path to Long-Term Wealth

Dividends may be boring if you’re looking for casino-like thrills, but slow and steady is the path toYour-key-to-making-Money long-term wealth.

The comments above and below are excerpts from an article by Tony Sagami ( which has been edited ([ ]) and abridged (…) to provide a faster and easier read.

I love dividends, and I’m far from alone.

  • Do you know the only thing that gives me pleasure? It’s to see my dividends coming in. — John D. Rockefeller
  • I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” —Mark Cuban
  • One of the biggest dividend lovers of all is Warren Buffett, who has more than 90% of the Berkshire Hathaway portfolio invested in dividend-paying stocks.

Dividends Compound Annually for Enhanced Returns

…A 1%, 2%, or 3% dividend may not sound like a fortune, but those seemingly small payouts truly add up. For the first seven months of 2016, the S&P 500 was up 6.3%, but with dividends, the total return increased to 7.7%—that’s an extra 22%. Since 1930, dividends have accounted for roughly 40% of the total return of the S&P 500 Index. Moreover, dividend-paying stocks have compounded total returns of 9.2% vs. 2.3% a year for non-dividend-paying stocks.

The sweetest spot of the dividend-loving world is companies that can consistently increase their dividend.

Here’s what I mean: If you invested $10,000 in a company that pays a 3% dividend, you’ll receive $300 in dividends a year. However, if that company increases its dividend by 5% a year, after 10 years you will have received $3,773 in dividends and enjoy a yield of 4.65%.

Companies That Have Increased Their Dividend Payments the Most Over the Last 3 Years

Over the last three years, the 10 S&P 500 stocks that have raised their dividends the most are SunTrust Banks (STI), Citigroup (C), Bank of America (BAC), Zions Bancorp (ZION), Regions Financial Corp. (RF), MasterCard (MA), Danaher (DHR), Southwest Airlines (LUV), Capital One (COF), and Vulcan Materials (VMC).

Companies That Have Increased Their Dividend Payments For 25+ Consecutive Years

Of course, dividends are not guaranteed and can be reduced or eliminated at any time a board of directors sees fit, but there is a select group of companies that have increased their dividend payments for 25+ consecutive years in a row.

3M (MMM)
Abbott Laboratories (ABT)
AbbVie (ABBV)
Aflac (AFL)
Air Products and Chemicals (APD)
Archer-Daniels-Midland (ADM)
AT&T (T)
Automatic Data Processing (ADP)
Becton, Dickinson & Company (BDX)
Brown-Forman (BFB)
Cardinal Health (CAH)
Chevron (CVX)
Chubb (CB)
Cincinnati Financial (CINF)
Cintas (CTAS)
Clorox (CLX)
Coca-Cola (KO)
Colgate-Palmolive (CL)
Consolidated Edison (ED)
CR Bard (BCR)
Dover (DOV)
Ecolab (ECL)
Emerson Electric (EMR)
Exxon Mobil (XOM)
Franklin Resources (BEN)
Genuine Parts Company (GPC)
HCP, Inc. (HCP)
Hormel Foods (HRL)
Illinois Tool Works (ITW)
Johnson & Johnson (JNJ)
Kimberly-Clark (KMB)
Leggett & Platt (LEG)
Lowe’s (LOW)
McCormick & Company (MKC)
McDonald’s (MCD)
Medtronic (MDT)
Nucor (NUE)
Pentair (PNR)
PepsiCo (PEP)
PPG Industries (PPG)
Procter & Gamble (PG)
Sherwin-Williams (SHW)
Sigma Aldrich (SIAL)
S&P Global (SPGI) (formerly McGraw Hill Financial)
Stanley Black & Decker (SWK)
Sysco Foods (SYY)
T. Rowe Price Group (TROW)
Target (TGT)
V.F. Corporation (VFC)
W.W. Grainger (GWW)
Walgreens Boots Alliance (WBA)
Wal-Mart Stores (WMT)

The media likes to call these companies “Dividend Aristocrats,” and they are a great starting point for all dividend hunters.

ETFs Tailored Towards Dividends

However, if you’re more of an ETF investor, there’s a trio of ETFs specifically tailored toward dividends.

  • SPDR S&P Dividend ETF (SDY) is one of the most popular dividend-focused ETFs. It comprises companies that have been consistently increasing their dividends every year for at least 25 years, such as the Dividend Aristocrats.
  • Vanguard Dividend Appreciation ETF (VIG) invests in the NASDAQ US Dividend Achievers Select Index, companies that have increased dividends over the past 10 years.
  • SPDR S&P Global Dividend ETF (WDIV) takes a global approach to dividends, with companies that have raised dividends for at least 10 years consecutively.


Dividends may be boring if you’re looking for casino-like thrills, but slow and steady is the path to long-term wealth.

To get more dividend-rich investment ideas, try my monthly Yield Shark newsletter risk-free for 90 days.

Tony Sagami
Tony Sagami
Mauldin Economics

Disclosure: The above article has been edited ([ ]) and abridged (…) by the editorial team at (Your Key to Making Money!) to provide a fast and easy read.
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