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Imagine the S&P 500 was split up into
five equal groups ranked solely in terms
of yield: the 100 highest-yielding
stocks in the first group, the next 100
in the second, etc. From 1957 to 2003,
stocks in the highest-yielding group
would have turned $10,000 into how much?
A.) $4,627,500
B.) $746,220
C.) $1,490,175
D.) $3,844,945
E.) $4,815,160
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Published:
March 7, 2008
The
correct answer is 
(A.) $4,627,500
The
100 highest-yielding members of the S&P
500 returned over +14% annually from
1957 to 2003. It may seem
unbelievable, but this growth would have
turned a $10,000 investment into
more than $4.6 million (assuming
reinvestment) -- seven
times as much as the same amount
invested in the S&P's 100 lowest-yielding stocks.
It's proof positive that over time,
a little yield goes a long way. At
the same time, investing in stocks
that pay out dividends can also help
soften the blow of a falling market.
The further a stock slides, the
higher its yield climbs, thereby
inviting buyers and helping to put a
floor on the share price. And the
fact that some companies have ample
cash on hand to distribute to
shareholders is itself a reassuring
sign -- most dividend-payers are
well-established and generating
positive cash flows.
As you can see,
investors who seek the relative
shelter of dividends definitely come
out ahead in a down market.
That's why StreetAuthority's Nathan
Slaughter, editor of the
value-investing newsletter
Half-Priced Stocks, set out to find
undervalued stocks that have had
their yields move drastically higher
amid the recent market sell-off.
Eight of the most promising dividend
standouts -- which average a +24%
increase in their yield since
October 2007, appear in the Nathan's
latest issue. To see his entire list
and to learn more about the
Half-Priced Stocks newsletter,
please
visit this link.
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