10 Dividend Champions: Lowest Yields, Highest Total Returns

The importance of dividends cannot be disputed or denied. To paraphrase Will Rogers, dividends provide investors both a return of and a return on invested capital. Consequently, in addition to augmenting returns, dividends also simultaneously reduce risk. Each time a dividend is paid to an investor, the investor has less capital at risk equal to the amount of the dividend paid. As an aside, this important point is often left out when people are calculating yield on cost. Even though this return of capital is a great benefit, it also can require a new investment decision if the investor is not spending the dividends. One way to handle this is to only invest in dividend paying companies that offer a DRIP (dividend reinvestment program) program. This is a legitimate strategy that takes advantage of the benefits provided by the concept called “dollar cost averaging.” If the price of the stock you are reinvesting in is high, your dividend will buy fewer shares of expensive stock, and conversely, if the price of the stock you are reinvesting in is low, your dividend will buy more shares of the cheaper stock. This is a proven strategy that works in the long run.... Read more