Offering a winning strategy

 

Historically, dividends have helped investors to gain reliable income and additional growth from their investment portfolios over time. In fact, the boost that dividends provide can help to mitigate the effects of market volatility on a portfolio, thereby helping investors to feel more comfortable with their equity investments and stay invested through turbulent times. Moreover, many companies are able to grow their earnings and reward investors by increasing their dividend payouts, which can also lead to share-price gains.

 

Dividends play a key role in long-term returns

 

Dividend-paying companies represent a significant portion of the Canadian equity market and are typically well-established, soundly managed companies with stable businesses. Dividends can also be an important part of a portfolio’s total return, helping to offset losses in times of market declines, while boosting portfolio returns when markets are rising.

 

Get a head start with dividends

 

Over the past 44 years, dividends have contributed an average of 3.2% per year to the S&P/TSX Composite Total Return Index *, representing approximately one third of the average annual total return.

While no one knows exactly when markets will move up or down, dividend income can help deliver consistent cash flow to investors. It can also provide exposure to compelling growth opportunities that emerge amid solid corporate earnings and improving global economic growth.

 

Dividend paying equities can also offer a yield premium over Canadian government bonds and offer more favorable tax treatment.