of Dividend-Paying Stocks
March 22, 2011
Increased market volatility has placed dividend-paying stocks back into the spotlight. These securities have been long valued for their defensive characteristics during down markets, but their attractive combination of steady income and capital appreciation potential has also delivered consistent, strong returns across full market cycles.
Given this context, equity dividend investing seems particularly relevant in today’s market climate. Facing the prospects of slower growth opportunities and more extreme, more frequent market gyrations, investors may be well served by the predictability of dividends to help stabilize – and enhance – their equity returns.
Consider two of the benefits of dividend-paying stocks:
- A clear signal of corporate financial health. Dividends enhance earnings transparency of a company and exert a level of financial discipline on management. They also increase corporate accountability and can be a signal of management’s confidence for future growth prospects.
- Significant source of total return. Dividend-paying securities offer the potential for both capital growth and income. The compounded effect of reinvested dividends accounted for nearly 50% of equity total return. Viewed another way, eliminating the compounded dividends would have resulted in an annualized total return of 5.2% compared to 9.4% when they are included. See chart below.
Disclosures:
Past performance is not indicative of future results. This information is educational in nature, provided as general guidance on the subject covered, and is not intended to be authoritative or to provide tax or investment advice. This paper reflects the analysis and opinions of RidgeWorth Investments as of February 2011.
Equity securities (stocks) are more volatile and carry more risk than other forms of investments. Dividends reflect past performance and there is no guarantee they will continue to be paid or that this strategy will be successful.
An investor should consider the fund’s investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the RidgeWorth Funds can be found in the fund’s prospectus. To obtain a prospectus, please call 1-888-784-3863 or visit www.ridgeworth.com. Please read the prospectus carefully before investing.
®2011 RidgeWorth Funds. RidgeWorth Funds are distributed by RidgeWorth Distributors LLC. RidgeWorth Investments is the trade name for RidgeWorth Capital Management, Inc., the adviser to the RidgeWorth Funds, and is not affiliated with the distributor.
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