4 Dividend Darlings

Investopedia

Any long-term investor can appreciate the value of a dividend. Over time, the dividend becomes a bigger factor in the total return of a company. Mathematically speaking, assume a share of stock is bought for $10 and yields 3%. Five years later the shares trade for $20 and yield the same 3% due to increased dividend payments. For the investor who purchased shares at $10, her effective yield is now 6%. Over the course of 10 years or more, the dividend effect on your portfolio becomes truly significant.

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Dividends Matter
Dividends do matter but only when they can be counted on to be paid consistently. Often, an abnormally high yield is a market signal that a dividend may be temporary. Yet the market is not always right. During the recession, quality energy master limited partnerships were yielding 15% and up because investors were selling shares as the price of oil and natural gas was declining (dividend yields rise when stock prices decline and vice versa). Yet energy MLPs had hedged production at energy prices that enabled them to maintain distributions. When investors caught on, shares went soaring... read more.