It’s Time to Take a Closer Look at Dividends

Abstract
§ Yields from dividend-paying stocks → very attractive in today's market environment
§ The highest dividend yields tend to come from companies in the utilities, telecommunications services and financial sectors.
o Organization → information technology and health care → not to provide significant dividends.
§ Stock valuations elevated around the world
o investors concerned about equity market volatility

Content
§ Many plan members are still skittish about investing in equities
o Result → holding disproportionate amounts of fixed income
o Dividend-paying stocks → encourage investors to participate in equity market → acquire sufficient growth
§ Successful long-term investors → see a company's ability to distribute dividends consistently → indicator that the business is well run
o Others → dividend-paying stocks → outperform other equities when markets are flat or sinking
o Dividend income → the biggest driver of equity market returns
§ TSX index → grown by a factor of 11 over the past five decades
o TSX Total Return Index → adds by a factor of more than 50 over the same time period
o strong performance has tended to come with lower volatility in recent periods

Attractive Outlooks
§ Yields from dividend-paying stocks → very attractive → today's market environment
o outlook for dividend-paying stocks appears positive
o With:
i. corporate earnings momentum losing steam
ii. stock valuations elevated around the world
iii. investors concerned about equity market volatility
more investors will turn to the reliable returns of dividends