Are Dividend Paying Stocks Poised to Outperform?

Domestic equities have rebounded dramatically from their lows of March 9, 2009. From its close on that date through the end of 2010, the total return on the Russell 1000 has been 96.73%, or 45.22% annually. The total return on the Russell 2000 has been 134.03%, for an annualized gain of 59.81%. Initial rallies from bear market lows are often characterized as “junk” rallies, led by companies with weak fundamentals, poor earnings quality, and weak management. Many of these stocks are in the most economically sensitive sectors and trading for less than $10/share. More often than not, small and mid cap companies outperform large and mega cap issues during such rallies. The initial rallies from the market lows in 2002 and 2009 exhibited these characteristics.... Read more