Dividends make a difference

[Louis Proyect <lnp3@xxxxxxxxx>]

Don?t Wait Up For the Party

It?s tempting to hope that spectacular market gains will return. Don?t hold
your breath. And get ready for a new ?normal?

By Allan Sloan
NEWSWEEK

While people wait for ?normalcy??which they define as rising stock
prices?to reappear, the 27-month bear market has wiped out many of the
outsize gains investors racked up in the late ?90s. The S&P has returned
less than 1 percent a year for the past four years, according to
Aronson+Partners?less than money-market funds. For the past 2-, 4-, 5- and
10-year periods, the stodgy old Dow has outperformed the Nasdaq. And here?s
a stunner. Richard Bernstein, chief U.S. strategist for Merrill Lynch,
calculates that if you invested a dollar in the sexy Nasdaq composite when
it started in 1971 and also invested a dollar in the yawn-inducing S&P
Utilities Index, your utility investment would be worth more. The
explanation? The utilities tortoise has beaten the Nasdaq hare because it
has paid higher dividends. Over 30 years, dividends really make a difference.

In a 20-percent-a-year world, dividends don?t matter much. In a 6 or 8 or
10 percent world, they matter a lot. Get used to it. Investors survived and
prospered, gradually, for 56 years averaging less than 9 percent. So can
you. Put away the party hats and noisemakers. Welcome to reality.

full: http://www.msnbc.com/news/760636.asp



Louis Proyect
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