Wednesday, February 17, 2016

Are dividend stocks better?

I did a quick test from 1-5-2005 to 1-5-2015.
I use the top 20 dividend stocks (highest dividend yield) and the bottom 20 dividend stocks in S&P 500. There are more stocks not paying dividends and the sort is on the stock symbol.

Here is the result:
Dividend stocks has 6% appreciation + 5% dividend = 11%.
Non-dividend stocks has 26% appreciation + 0% dividend = 26%.

Apple has a great return, so I took it out.
Non-dividend stocks has 15% appreciation, still better by 4%.

I have used dividend growth and top dividend yield with 10% growth. They both have 7%. This is not the real life simulation which should be as follows. Start each time in the beginning of the year and end at the end. Repeat it for the next nine years. Average the returns. For the above period, you should have ten tests. To make it even better, do one every month starting on the first day of the month and end on the same day of the same month next year.

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