Dividend stocks do better.

If you invested $100 in 1972 in a typical stock which did NOT pay a dividend, how much would your $100 be worth in April 2009? a) $120 b) $129 c) $941 d)$2,246. How about $129. That's less than a one per cent gain per year. Why would one buy a non-dividend paying stocks? Folks who buy stocks which do not pay dividends hope for a gain. There is simply no other way to make a profit. Right? On the other hand, if you bought a 'typical' common stock which grew its dividend over this period, or a company that initiated a dividend, your $100 would have growth to $2,246 along with the dividends. Fascinating numbers, eh. Also look at my 'evidence it works' page which display similar data over different periods of time. The message is clear. I discovered dividend growth decades ago and we are, as a result, enjoying an increasing retirement income. There is no guarantee that our dividend will not be cut, but we selected our common stocks carefully (preferreds are not and do not grow dividends), and, even with all the turmoil over the last year, we have not had a dividend reduction. In fact, the dividends paid by the companies followed in the Connolly Report are up, on average, by 5% so far in 2009.