Searching for Yield Around the Globe

Investing with a dividend-yield criterion makes sense not only on an individual stock level but also on a country level, especially in a low-return environment

Fernando Luque 8 December, 2011 | 2:23PM
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Read more from Morningstar's Global Equities Week here.

An examination of long-term equity returns reveals that an important part of the return comes directly from the dividend yield. In the last 10, 20, or even 30 years, the dividend yield has been around 2% annually for an index such as the S&P 500, independent of the total return obtained during the period. This observation leads us to a very practical conclusion: In a low-growth, low-return environment such as the one we will likely experience in the future, dividends will be a crucial part of total return. There are two questions that arise from this assumption. First, which countries around the globe have the highest dividend yield? And second, does a higher dividend yield necessarily mean a higher total return for investors?

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About Author

Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain 

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