Making Use of Dividend-Paying Shares

Portfolio Lesson 5.9: Why might you want to seek out dividend-paying shares?

Morningstar 15 July, 2010 | 10:29AM
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This lesson will discuss why you might want dividend-paying stocks in your portfolio, and explore some popular dividend-based stock strategies. Catch up on previous Investing Classroom lessons in our Learning Centre.

A Little History
For most of the 20th century, the average dividend yield (annual dividend per share divided by price per share) was around 5%. But over the last 20 years of the 20th century, however, yields steadily fell.

Why the change? The bull market of the 1990s, for one. As a stock's price rises, its yield falls. So as the FTSE rallied during the decade, its dividend yield naturally shrank.

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