Study Examines Dividend Policy Performance Over 50 Years

A study published by Ned Davis Research examined dividend policy performance by analyzing 50 years of S&P 500 returns. The research found that companies which raised or initiated dividends produced an average annual return of 13%. This outperformed the 12.7% average return achieved by all dividend-paying stocks. Companies that paid but did not raise their dividends averaged 11.1% annually, while those who cut or eliminated dividends returned only 9.5%.

The findings suggest a clear pattern regarding the long-term performance advantage of dividend growth and initiation. The study provides historical data on how different dividend strategies correlate with average annual returns over a half-century.