Dividends Essential Investing in a Low Growth Market

Collecting dividends may seem an uninteresting way to accumulate wealth, but it is effective, particularly when the global economic environment remains uncertain

J.P. Morgan Asset Management 25 August, 2016 | 3:04PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, James Davidson, manager of the JP Morgan Global Equity Income fund, examines the power of dividends.

Old fashioned dividend stocks are having a moment. Equity markets have tripled since 2009, but investors have scant sources of income with government bond yields at record lows. Therefore, if investors are not thinking about income dividends and growth as a component of total return then they aren’t considering the full story.

Going back to the 1920’s, nearly half of the return from holding US equities has come from the contribution of dividends, making them almost equally as important as capital appreciation. Although collecting dividends may seem an uninteresting way to accumulate wealth, it can be pretty effective, particularly when the global economic environment remains uncertain.

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.