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It’s Never Too Late for Dividend Religion

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It’s never too late to get some dividend religion. Yes the media is all over this record-setting Dow Jones Industrial Average (DJIA). But what good is a record if you didn’t participate in it? I’m afraid that’s the truth that too many investors would not care to admit. It’s never fun when you miss the boat.

Companies are drowning in cash, partly because they’re too scared to do anything with it. That’s why this year will be a record year for dividends and stock buybacks. I prefer dividends because I trust myself more than the corporate guys who are good at exploiting business opportunities but not at investing idle cash. Stock buybacks are good, but corporate egos are still getting in the way of returning cold, hard cash to the owners of the company, the shareholders.

This year is on pace to break a record for dividends, with an expected $300 billion in dividend payouts this year, up from $282 billion, according to S&P Dow Jones Indices. Young Research’s Retirement Compounders (RCs) common stock program is certainly on a record tack, as I hope you are too. Stay tuned for our 10-year performance. I think you’ll be pleasantly surprised.

Long Term RC 3.1.13

Are you celebrating the DJIA’s return back to record territory? It’s party time, right? The media certainly think so. If you listen to them, you’re always buying high and selling low. They thought the world was ending at DJIA 6,547. That’s why I like dividend-paying stocks, especially the ones in the RCs. Dividends keep you in the game and guarantee you won’t miss the records: buying low and enjoying the highs.

DJIA 6,547 wasn’t fun. But dividend-paying stocks that yield 4–5% like the RCs make the wait more palatable. Remember, back in 2007 it took the DJIA only 17 months to plunge to the low of 6,547 in March of 2009. It took four years to break the record last week with a close at 14,253. It’s been a great five-year run if you’ve had dividend payers.

 

Imagine having no dividends the next time around. Let’s not forget that it has taken as much as 25 years for the DJIA to get from its bear-market low to a new high. That was 7,253 days from November 13, 1929, to November 23, 1954. That’s a long time to wait for the stock market. Having the peace of mind brought by dividends can make the waiting much easier.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.