The Extraordinary Power of Dividends: ExxonMobil Edition

"Dividends?" he asked. "I'm trying to make my clients wealthy. You don't do that waiting for tiny checks in the mailbox every quarter." Even then, I had enough horse sense to know he was wrong. Paying attention to dividends is exactly how you become wealthy over time. Wharton professor Jeremy Siegel made a wonderful discovery in his book The Future for Investors. The greatest long-term returns typically don't come from the most innovative companies, or even companies with the highest earnings growth. They come from companies that happen to crank out dividends year after year. Simply put, since the 1950s, "the portfolios with higher dividend yields offered investors higher returns." Market commentary regularly centers on price gyrations, yet dividends historically have accounted for more than half of total returns. Reinvest those dividends, and your results become magnitudes greater. Take ExxonMobil (NYSE: XOM), for example. Since the late 1960s, Exxon's shares have returned 3,700%, but the total return leaps more than 20,000% higher once you factor in reinvested dividends.... Read more