Over the last few years, there have been a lot of old school investment relationships that have been tested and they have come up differently than they normally do. Things like “value beats growth,” “bonds and stocks move in opposite directions,” and “small beats large” are three of the biggest philosophies that come to an investor’s mind. Another one could be the importance of dividends to a portfolio.
As the markets have surged higher since the recession, the importance of dividends has been placed on the backburner by many investors, even income seekers. Total returns and capital gains have become the name of the game. And it’s easy to see why, as hot growth sectors like tech have become champions.
But, going forward, investors may want to get acquainted with dividend-paying equities once again.
With the markets now getting top heavy and a recession potentially coming down the pike, dividends are once again going to be a huge driver of returns. As they say, the more things change, the more they stay the same.
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