Strategy Highlight: The Case for Equity Income

In the current environment of low interest rates and bond yields, investors seeking income might consider looking to dividend-paying stocks as an investment option. History has shown that investing in dividend-paying stocks not only provides shareholders with income, but also has been an attractive investment strategy in terms of total return and as a complement to fixed income investments. 

Investors have long been attracted to firms which pay dividends and have attractive yields, and with good reason, as dividend-paying firms have tended to experience above-average stock returns with lower levels of risk over the long term. Publicly traded companies first started paying dividends nearly 400 years ago. The Dutch East India Company was the first recorded public company ever to pay regular dividends, starting in the 1600s. In the United States, some companies have now been paying dividends for more than 100 years. For example, Coca Cola first paid a dividend in 1920 while General Mills paid its first dividend in 1898 and has paid one for 120 straight years! Over the last 30 years, on average, nearly 70% of large U.S. companies and more than 90% of large international companies have paid dividends. Today, more than 1,400 U.S. and 700 international firms pay dividends.

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