“This is why not all dividends are created equal,” emphasised Ian Mortimer, the other co-manager of the Guinness Global Equity Income Fund. But historically, they have proven their worth as a vital source of income, particularly during periods of economic recession and slower growth, Mortimer said.
In the 1940s and 1970s, dividends made up slightly over three quarters (3/4) of S&P500 total returns.
S&P500 returns for individual decades since 1940
Source: Guinness Asset Management, Bloomberg
And when you consider dividend growers have historically generated a higher total return than non-dividend paying stocks or dividend cutters, Mortimer said, the evidence for their merit is undeniable.
Historical total return of stocks within the S&P500 between 1972 and 2010
Source: NED David ResearchEspecially now, when the political and economic climate is so uncertain, the stability provided by dividend income is even more attractive, he said.
