The Power of a Quality Dividend Investment Strategy
Q1 2020

  • Dividends: The Most Powerful Force in the Universe*
  • Dividend Growth has Generated Income Growth
  • Where Can Investors Turn For Income?
  • Why Quality Matters?

* From Albert Einstein quote, “Compound interest is the most powerful force in the universe.”

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The Power of Dividend Investing

Dividends are payments that companies make to shareholders at regular intervals, usually quarterly. Dividends and compounding may be a strong force in generating investor returns and growing income.

The Most Powerful Force in the Universe?

Albert Einstein once stated, “Compound interest is the most powerful force in the universe.” This theory is highlighted by the contribution from dividends and compounding to the long-term performance of the S&P 500.

The S&P 500 is widely regarded as one of the best gauges for the large-cap U.S. stock market. Dating back to the start of 1957, the price return of the S&P 500 is over 6500%. The total return which includes the impact of dividends and compounding is over 46000%. Approximately 80% of the hypothetical total return that an investor would have earned over this long period is attributable to dividends and compounding.

“Compound interest is the most powerful force in the universe.”
– Albert Einstein

80% of S&P 500 total returns come from dividends and compounded returns.

Source: Bloomberg Finance L.P., data as of 12/31/2019.
Past performance does not guarantee future results. The referenced index is shown for general market comparisons and is not meant to represent the O’Shares Funds. Investors cannot directly invest in an index.

Dividend Growth has Generated Income Growth

Investors looking to boost the income generated by their portfolio may want to consider high quality dividend paying stocks. Profitable dividend paying companies have the ability to maintain and even grow dividend payments to their investors. This is demonstrated by the growth in dividends per share paid by the companies in the S&P 500. From 2010 through 2019 the dividends per share paid by the companies in the S&P 500 have more than doubled, a growth rate of nearly 11% per year.

Source: Bloomberg Finance L.P., data as of 12/31/2019.
Past performance does not guarantee future results. The referenced index is shown for general market comparisons and is not meant to represent the O’Shares Funds. Investors cannot directly invest in an index.

ETF Strategy Fund Flows: Quality and Dividends

Quality and Dividend ETF strategies have taken in over $20 billion and $7 billion, respectively in 2019.

During 2019, yield curve inversion, slowing global growth and trade wars had investors potentially positioning their portfolios for late economic cycle investing by shifting to Quality and Dividend strategies.

Source: Bloomberg Finance L.P., data as of 12/31/2019.
Bloomberg classifications based on documents and issuer input. For informational purposes only. Not meant to represent any investment.

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