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The Golden Age of Dividends
Special Report
From energy to fast-food to technology, a fearful post-financial crisis
marketplace sends dividend volumes to all-time highs
From the Latin word dividendum, meaning “a thing to be divided,” dividends have been a much-shunned concept
in the investor's glossary over the years.
Not satisfied with slow and steady returns, many investors changed their titles to traders and went for it all by
investing in high-risk, high-reward stocks and securities.
Hoping to hit it big like Buffett or Gates or any of the other Wall Street big shots you see in the mainstream press,
they let the favorable income of dividends fall by the wayside.
Well, we here at Energy and Capital say let them have their trading... let them have their series of wins and
losses... and let them enjoy their casino stocks, bubbles, and crashes!
The rest of us — the investors — will be building sizable holdings in companies that pay dividends all while
watching our compounded returns balloon into a real bounty of wealth.
Crisis for You, Consistent Income for Me
Everything from Exxon to WWE saw massive losses during the recession as investors pulled as much money as
possible away from the stock market.
Oddly enough, the best-performing stocks at the time were the ones that paid high dividends. Many investors
saw the value — not only of compounded returns, but also of the extra income at a time when unemployment
was spiraling out of control on its way to 10%.
And yet dividend stocks consistently outperformed the S&P 500...
The chart above shows the Vanguard Dividend Appreciation ETF (NYSE: VIG) versus the S&P 500 during the
worst of the financial crisis. Although both suffered serious losses in the bloodbath, VIG saw less and recovered
much quicker.
Even better for owners of VIG were their dividend returns during the recession. While the stock suffered massive
losses in price, investors could still recoup some much-needed cash every quarter thanks to the dividend
structure.
The Golden Age
It must have been these factors that reminded investors about the value of dividend stocks.
Before the recession, dividends were a coveted investment for retirees (don't worry; they still are). But now, with
the financial distress still fresh in our memories, more and more regular investors of all ages have found the
safety of dividends to be exciting business.
The resurgence in the volume of dividend stocks over the last five years or so has brought investing back to its
roots: invest in a company, own a portion of it, watch it grow, and share in the spoils (read: collect dividend
checks).
We can't blame them, either...
Just take a look at how well some of the best dividend stocks are performing these days...
Above is the chart for Emerge Energy Services LP (NYSE: EMES). It's a mastered limited partnership that
provides sand for hydraulic fracturing to oil and gas drillers.
More important, though, is that it provides a 4.05% dividend yield, which translates to about $4.67 per share at
the current share price of $115.43.
Of course, those numbers may seem rather boring... but if you owned 10,000 shares, that would mean an extra
$46,700 in your bank account every single year thanks to the dividend.
And once you add the returns over time — EMES has risen 591% in a year — you'd be looking at a serious
return on your investment.
And if you think dividends can only come from longstanding, well-established, boring industries, you're wrong.
One of the best performers over the last year has been the Guggenheim Solar ETF (NYSE: TAN). This ETF
invests exclusively in solar companies — whether it be companies that manufacture the panels or ones that
distribute the energy.
Take a look at how it's fared over the last year...
Advancing nearly 50% in a year is a great result for a technology that still has yet to gain a serious foothold in
America and the rest of world.
That said, the company only pays a 1.1% dividend, but we can expect that to change as the technology becomes
more efficient and becomes a mainstay for countries looking to cut back on pollution.
Apple Boosts Its Dividend
After years of solid growth, and with billions of dollars in cash in its accounts, Apple (NASDAQ: AAPL) just
recently upgraded its dividend payouts.
Finally, owners of the incredibly profitable computer company can now reap the rewards that come with owning
shares of the tech giant.
As you can see above, its solid growth since 2009 meant Apple could afford to re-invest some of its profits back
into its loyal shareholders that range from huge institutions to retirement funds to individual investors.
And with a 1.93% dividend on shares worth $98 apiece, an investor with 10,000 shares could see an extra
$19,300 this year thanks to Apple stock.
Dividend Future
It's no wonder retirees have loved dividends for so long...
Of course, veteran investors know consistent, market-beating returns will always trump the pipe dream of
once-in-a-lifetime gains.
And a consistent source of income from a well-established company simply cannot be beat — whether it's a
bear or bull market, bubble or crash.
Now that regular investors all over the world — and not just retirees — are finally moving back into dividend
stocks, expect to see yields and share prices rising.
In a financial world marked with ups, downs, uncertainty, anxiety, and speculation, dividends are a safe haven for
intelligent investors who haven't lost their way...
If making money is your goal, look no further than dividends.
Good Investing,
Keith Kohl
@KeithKohl1 on Twitter
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands.
His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith
connects with hundreds of thousands of readers as the Managing Editor of Energy and Capital as well as
Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth
coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the
mainstream media. For more on Keith, go to his editor's page.
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