The Power of a Quality Dividend Investment Strategy
Q4 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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Why Dividend Quality Matters?

2020 was challenging for global economies as the pandemic forced many businesses to shut down, at least temporarily. As a result, companies in the most impacted sectors were forced to either cut or suspend dividends. This highlighted the importance of an emphasis on dividend quality in equity income strategies. Companies that have demonstrated the ability to consistently grow dividends and have stronger dividend coverage may be better positioned to weather unexpected interruptions to operations.

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 8000%. The total return which includes the impact of dividends and compounding is over 50000%. 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 12/31/2020.
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 2020 the dividends per share paid by the companies in the S&P 500 have more than doubled, a growth rate of nearly 10% per year.

Source: Bloomberg Finance L.P., data as of 12/31/2020.
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.

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