High dividend payers the place to be

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Bespoke Investment Group highlights that the average stock in the S&P 500 Index is down 6.4% since October 28 high. “We broke the Index into deciles (10 groups of 50 stocks each) based on dividend yield and then calculated the average performance of stocks in each decile since October 28 to see how income-paying stocks have performed during the current market pullback.

“As shown below, the two deciles with the highest yielding stocks have averaged declines of 4.7% and 4.3% respectively, while the three bottom deciles based on dividend yields are significantly underperforming,” said the report.

High dividend payers typically outperform in times of uncertainty, and this has certainly been the case during the current pullback. I feel very comfortable recommending the purchase of dividend aristocrats, especially international companies tapping into high growth countries, during market corrections.

Source: Bespoke Investment Group, November 18, 2011.

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