{"id":481528,"date":"2022-08-05T21:15:00","date_gmt":"2022-08-05T18:15:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/retirement-weekly-a-higher-dividend-yield-isnt-always-better\/"},"modified":"2022-08-05T21:15:00","modified_gmt":"2022-08-05T18:15:00","slug":"retirement-weekly-a-higher-dividend-yield-isnt-always-better","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/retirement-weekly-a-higher-dividend-yield-isnt-always-better\/","title":{"rendered":"#Retirement Weekly: A higher dividend yield isn\u2019t always better"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a432181e7fae\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a432181e7fae\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/retirement-weekly-a-higher-dividend-yield-isnt-always-better\/#%E2%80%9CRetirement_Weekly_A_higher_dividend_yield_isnt_always_better%E2%80%9D\" >&#8220;Retirement Weekly: A higher dividend yield isn\u2019t always better&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/retirement-weekly-a-higher-dividend-yield-isnt-always-better\/#Long-term_investors_should_focus_on_companies_whose_dividends_are_most_likely_to_grow\" >Long-term investors should focus on companies whose dividends are most likely to grow<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/retirement-weekly-a-higher-dividend-yield-isnt-always-better\/#Mark_Hulbert\" >Mark Hulbert<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CRetirement_Weekly_A_higher_dividend_yield_isnt_always_better%E2%80%9D\"><\/span>&#8220;Retirement Weekly: A higher dividend yield isn\u2019t always better&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Long-term_investors_should_focus_on_companies_whose_dividends_are_most_likely_to_grow\"><\/span>\n  Long-term investors should focus on companies whose dividends are most likely to grow<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0001088090\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0001088090\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       When it comes to dividends, too much of a good thing is <strong><em>not<\/em><\/strong> wonderful.<\/p>\n<p> That\u2019s especially important information for retirees and near-retirees, many of whom are substituting dividend stocks for some of their bondholdings. Their natural instinct is to gravitate toward those stocks with the highest dividend yields.<\/p>\n<div class=\"paywall\">\n       They should resist that instinct, however. On average over the long term, the dividend-paying stocks that performed the best were those whose yields were significantly lower than those with the absolute highest yields.<\/p>\n<p>Consider five portfolios that are constructed based on stocks\u2019 dividend yields. The first contains the 20% of exchange-listed stocks with the highest yields, while the fifth contains the 20% with the lowest yields. The other three portfolios contain the quintiles of stocks in between these extremes. These portfolios are rebalanced once a year to reflect changes in relative dividend yields.<\/p>\n<p>The accompanying chart reports these portfolios\u2019 annualized returns since 1927, courtesy of data from Dartmouth professor Ken French. Notice that the best return was produced by the second-highest yielding quintile of stocks\u2014not the highest-yielding quintile.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:70%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-598483?width=540&amp;size=1.4285714285714286 540w, https:\/\/images.mktw.net\/im-598483?width=620&amp;size=1.4285714285714286 620w, https:\/\/images.mktw.net\/im-598483?width=639&amp;size=1.4285714285714286 639w, https:\/\/images.mktw.net\/im-598483?width=700&amp;size=1.4285714285714286 700w, https:\/\/images.mktw.net\/im-598483?width=700&amp;size=1.4285714285714286&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-598483?width=700&amp;size=1.4285714285714286&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-598483?width=700&amp;size=1.4285714285714286&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-598483?width=700&amp;height=490\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n      <\/figcaption><\/figure>\n<\/p><\/div>\n<p>       To understand this counterintuitive result, you have to focus on dividends\u2019 growth rate over the long term. A stock with a sky-high yield might look good now, but if its dividend doesn\u2019t grow in coming years its contribution to your long-term return will be modest\u2014or worse. Far better to pick a stock whose dividend is modest by current standards but which will grow faster over time.<\/p>\n<p><strong>Citigroup versus Procter &amp; Gamble<\/strong><\/p>\n<p>There are many examples I could use to illustrate this point. Consider first Citigroup<br \/>\n        C,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/207741460\/composite\" class=\"positive\">+0.66%<\/bg-quote><span>,<\/span><br \/>\n       which was one of the highest-yielding stocks in the S&amp;P 500<br \/>\n        SPX,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/210599714\/realtime\" class=\"negative\">-0.52%<\/bg-quote><br \/>\n       before the global financial crisis. During calendar 2007, the company\u2019s quarterly dividend was 54 cents a share, which translated to a 7.3% yield using the stock\u2019s year-end-2007 price.<\/p>\n<p>During the financial crisis, however, Citigroup cut its quarterly dividend to a penny and then, in 2009, eliminated it altogether. The company restored paying a penny dividend in 2011, after undergoing a 1-for-10 reverse split. Since then it has gradually increased its dividend, which it now stands at 51 cents a share. On a pre-split basis, however, Citigroup\u2019s current dividend is less than 10% what it was in 2007; given where the company\u2019s stock is trading, however, this translates to a 3.9% yield.<\/p>\n<p>Contrast that sordid tale with that of Procter &amp; Gamble<br \/>\n        PG,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/202894679\/composite\" class=\"negative\">-0.63%<\/bg-quote><span>,<\/span><br \/>\n       which has increased its dividend every year for over 50 years. Based on its quarterly dividend of 35 cents a share at the end of 2007, the stock\u2019s yield was 1.9%\u2013far lower than Citigroup\u2019s at that time. PG\u2019s quarterly dividend has steadily increased since 2007, and now stands at 9.133 cents a share. Its current yield is 2.5%.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>There are three aspects of the contrast between Citigroup and Procter &amp; Gamble that are relevant to this discussion:<\/p>\n<ul class=\"articleList\">\n<li>\n      At the beginning and end of my comparison period, Citigroup\u2019s yield was <strong><em>higher<\/em><\/strong> than that of Procter &amp; Gamble\u2019s.<\/p>\n<\/li>\n<li>\n      Nevertheless, Procter &amp; Gamble\u2019s dividend grew at a 6.8% annualized clip from the end of 2007 to today. Citigroup\u2019s, in contrast, <strong><em>fell<\/em><\/strong> at a 14.9% annualized rate.<\/p>\n<\/li>\n<li>\n      On a total return basis, Procter &amp; Gamble\u2019s stock hugely outperformed Citigroup\u2019s. Since the end of 2007, according to FactSet, PG has produced a 7.9% annualized return, versus minus 9.9% for Citigroup.<\/p>\n<\/li>\n<\/ul>\n<p>The bottom line? Dividend yield alone is an unreliable guide to constructing a dividend stock portfolio with the best expected return over the long term. You must also focus on dividend-paying stocks with the greatest likelihood of not only maintaining its dividend but increasing it over time.<\/p>\n<p>With apologies to Mae West, too much of a good thing is not wonderful!<\/p>\n<p><em>Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letters that pay a flat fee to be audited. He can be reached at <\/em><em>mark@hulbertratings.com<\/em><\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Mark Hulbert\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/topics\/journalists\/mark-hulbert\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/MktwHulbert\",\"text\":\"@MktwHulbert\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:contributors@marketwatch.com\",\"text\":\"contributors@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Mark_Hulbert\"><\/span>Mark Hulbert<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><ufc-follow-author-widget product=\"marketwatch\" author-id=\"124_MW\" author-name=\"Mark Hulbert\" signin-url=\"https:\/\/accounts.marketwatch.com\/login?target=https%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fa-higher-dividend-yield-isnt-always-better-11659717500%3Frss%3D1%26siteid%3Drss\" panda-api=\"https:\/\/follow-api.marketwatch.com\"><\/ufc-follow-author-widget><\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C06575-04D4-B545-7109-A5A7313DEF03%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Retirement Weekly: A higher dividend yield isn\u2019t always better&#8221; Long-term investors should focus on companies whose dividends are most likely to grow When it comes to dividends, too much of a good thing is not wonderful. That\u2019s especially important information for retirees and near-retirees, many of whom are substituting dividend stocks for some of their&#8230;<\/p>\n","protected":false},"author":1,"featured_media":481529,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-598691\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-481528","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/481528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=481528"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/481528\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/481529"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=481528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=481528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=481528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}