Finding Funds that Invest in Dividend-Paying Stocks?

Hi all:

How can one go about selecting and researching funds that invest mainly
in common stocks that pay dividends? Typical "fund screeners" don't
have this investment philosophy as a distinct "style" so you're forced
to paw through long lists of "value" funds, the typical category for
these funds. I've also tried searching for funds with Dividend or
Equity-Income in their names, but that's a slow and tedious process.

TIA.

Tom Young

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Maybe you want payola above other considerations (NAV/rankings), or
some assurance of it - which funds are not obligated to oblidge you.
Maybe they will, maybe they won't. Seems it would be hard, then, to
assess - [what] they have to sell a fund for both a positive image
while add the [implied] assurance of dividends. I'd also suspect a
limited field for income generation in the field of rising NAVs
performce and broader comparisons. Aside from tax planning and
resistance for fund advertising ploys, generally.


TomYoung wrote:
> Hi all:
>
> How can one go about selecting and researching funds that invest mainly
> in common stocks that pay dividends? Typical "fund screeners" don't
> have this investment philosophy as a distinct "style" so you're forced
> to paw through long lists of "value" funds, the typical category for
> these funds. I've also tried searching for funds with Dividend or
> Equity-Income in their names, but that's a slow and tedious process.
>
> TIA.
>
> Tom Young

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"TomYoung" <> wrote
> Hi all:
>
> How can one go about selecting and researching funds that invest mainly
> in common stocks that pay dividends? Typical "fund screeners" don't
> have this investment philosophy as a distinct "style" so you're forced
> to paw through long lists of "value" funds, the typical category for
> these funds. I've also tried searching for funds with Dividend or
> Equity-Income in their names, but that's a slow and tedious process.

I have gone hunting for these in the past. I don't know that I ever found a
screener, but from a number of sources and from memory:

Non-REIT mutual funds max. out at around 2, maybe 2.5% dividend yield, as
you may have noticed. Like you say, examine large value oriented funds for
their yields, first.

ETFs do better. IIRC some yield around 3%.

REIT funds are something to explore, though I was saying about a year ago
they were getting pricey and now they're even pricier. And of course REIT
funds are not diverse the way a blue chip mutual fund is.

I'm sure someone will post a screener that will help. Keep checking back.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Are you confident they have little chance of being whacked in value due
to the dividend tax break maybe not being extended after yet another
hurricane relief outlay? Anyway, one approach is to narrow your
universe to ETF's where there are less to paw thru. DVY and PEY comes
to mind, as well as a bunch of new ones coming out of Powershares.
Have you found an easy way to track total return, so hard but impt with
hi dividends?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

> in common stocks that pay dividends? Typical "fund screeners" don't
> have this investment philosophy as a distinct "style" so you're forced
> to paw through long lists of "value" funds, the typical category for

Morningstar categories are so dinosaur! It's almost a badge of honor
to be near the bottom of your class; most interesting new funds are
gross misfits to their stodgy old class (although maybe still
best-fit).

> these funds. I've also tried searching for funds with Dividend or
> Equity-Income in their names, but that's a slow and tedious process.

How are you looking? Here is an incomplete but very handy approach


I sorted it by YTD returns (total? market?), but you can click on any
column heading to resort, or change various parameters. Another
approach is
then clicking on the symbols of interest to display yield, return (t?)
and a bunch of stuff. Clumsy, but if you are on a mac just hit
apple-t on the symbols which will load the pages without disturbing
your screen, and you can process maybe a ton faster than crappy IE.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

sorry, click apple-mouse, not apple-t under mac safari. sounds funny,
but is super efficient especially with 2 finger scroll. On a pc as far
as i know the yahoo approach would take a zillion fiddly clicks and
screen refreshes, and might just stick with bizweek (hope that url
didn't get chopped; works here)

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Post removed (X-No-Archive: yes)

Re: Finding Funds that Invest in Dividend-Paying Stocks?

He wants dividend-paying stocks *to comprise* a mutual fund portfolio -
I made the assumption he wants a mutual fund that will *pay out* a
regular dividend schedule over its distribution of dividend equity
holdings (sic, Bong - wrongo).

PeterL wrote:
> > Maybe you want payola above other considerations (NAV/rankings), or
> > some assurance of it - which funds are not obligated to oblidge you.

> Huh?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

dumbstruck:

Thanks for the reply. I realized after my initial post that I could go
to Schwab and do a "symbol lookup" and specify a Security Type of
mutual fund, then enter "dividend" and "equity income" and get (I
think) a fairly complete list. The Business Week screener is nicer
than what I came up with since it has various metrics right there.

Thanks again.

Tom Young

Re: Finding Funds that Invest in Dividend-Paying Stocks?

TomYoung wrote:
> dumbstruck:
>
> Thanks for the reply. I realized after my initial post that I could go
> to Schwab and do a "symbol lookup" and specify a Security Type of
> mutual fund, then enter "dividend" and "equity income" and get (I
> think) a fairly complete list. The Business Week screener is nicer
> than what I came up with since it has various metrics right there.
>
> Thanks again.
>
> Tom Young

Tom

There are some nice ETFs which focus on dividend yield. If you google
search 'ETFs' you will get some nice screening tools.

D.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

darkness39 wrote:
>

Ahhh, IIRC that's from the poster that predicted the success of
dividend funds some years ago, when they were doing poorly and it
looked unlikely. Also the one who showed that small cap value is a
special case that beats efficient market theory, or some such (despite
long underperformance episodes). My portfolio thanks you!

We did touch on ETF's, and my whole reason to chat here was to think
thru the new powershares dividend etfs PID, PFM, and PHJ (they also
have PEY which seems a DVY wanna-be). Too new to show much on
screeners - even brokerages get confused and may price the shares as $0
(I rammed a trade thru anyway at a lowball limit price). You can click
powershares near bottom of link above. Or
or


Note how PID's index just smokes past the EAFE index (which has been
mostly smoking SP500). Powershares has a dynamic element for some of
their funds (not PEY, dunno PID) where they actually change the index
on the fly - see their "what are powershares xtf / dynamism" writeup.
Their smart PWS just whacks targeted sp500 over the head and PWO does
almost the same with nasdaq. See the following graph putting the
indexes in duncecap position, and powershares soaring above. Also
running high is EFA which is a proxy for the index PID should be
soaring above (you can put PID in, but only days old).


Wish this forums chief economist would darken our doors more often!
May be disheartened due to doom and gloom predictions for US economy
not panning out. Maybe this is the reason - the measurements showing
horrible savings rates don't account for american's investments or
investment growth or something?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Ugg, bad proof reading. By pws whacking sp500 I meant PWC (correct in
the graph). Meant to put in a caveat that PID dividends may not give
"qualified" tax breaks (anyone know?) and might best go in retirement
tax shelter area. And of course there are other high div etfs without
that in the name, but maybe special cases with more vulnerability...

Re: Finding Funds that Invest in Dividend-Paying Stocks?

dumbstruck wrote:
> darkness39 wrote:
> >
>
> Ahhh, IIRC that's from the poster that predicted the success of
> dividend funds some years ago, when they were doing poorly and it
> looked unlikely. Also the one who showed that small cap value is a
> special case that beats efficient market theory, or some such (despite
> long underperformance episodes). My portfolio thanks you!

I'm not clear I was so clever ;-). Value has had an enormous run, and
to my mind it is time to start thinking about Growth. *however* I am
thinking of Pfizer and Merck as 'growth' stocks, but in reality their
PEs are as low relative to the market as they have been in many years.
Merck also pays a 'value' dividend yield.

By contrast any value advantage to small cap over large cap has pretty
much disappeared right now. The historic PE premium of big cap stocks
has been almost entirely eroded. And in a scenario of a much lower US
dollar, it is the big cap stocks that may do relatively well (because
they tend to have large overseas operations, a natural hedge against a
fall in the USD).


>
> We did touch on ETF's, and my whole reason to chat here was to think
> thru the new powershares dividend etfs PID, PFM, and PHJ (they also
> have PEY which seems a DVY wanna-be).

Yes it looks like Powershares have some good product. You have to
trust that they know what they are doing but if they do they can add
significant value to a pure index tracking methodology.


> Note how PID's index just smokes past the EAFE index (which has been
> mostly smoking SP500). Powershares has a dynamic element for some of
> their funds (not PEY, dunno PID) where they actually change the index
> on the fly - see their "what are powershares xtf / dynamism" writeup.
> Their smart PWS just whacks targeted sp500 over the head and PWO does
> almost the same with nasdaq. See the following graph putting the
> indexes in duncecap position, and powershares soaring above. Also
> running high is EFA which is a proxy for the index PID should be
> soaring above (you can put PID in, but only days old).
>
>
> Wish this forums chief economist would darken our doors more often!
> May be disheartened due to doom and gloom predictions for US economy
> not panning out.

Growth has been good. Employment growth has not been particularly
good. The dollar has done better than I expected. The deficit problem
(Current Account and Federal Government) are horrific boxes with no
easy ways out. And there is no political will on either side, whereas
in the early 90s both Republicans and Democrats burnt considerable
political capital to tackle the problem: Bush I (an increasingly
impressive President)


Maybe this is the reason - the measurements showing
> horrible savings rates don't account for american's investments or
> investment growth or something?

The real estate market has gone further and longer than I believed
possible. The result is large parts of the US seem to be in dot com
valuation territory, but with people's *homes*. The results could be
catastrophic-- I don't envy the Fed trying to engineer an end to the
growth, without precipitating a collapse.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Firefox with 3rd party mouse semaphore extensions helps ease that pain.

dumbstruck wrote:
> On a pc as far
> as i know the yahoo approach would take a zillion fiddly clicks and
> screen refreshes,

Re: Finding Funds that Invest in Dividend-Paying Stocks?

www.powershares.com

If you use a broker then these are available to you.
If you want yield try this:

Under "Closed-End Fund ETFs" there is a place to enter desred yield.



"TomYoung" <> wrote in message
news:
> dumbstruck:
>
> Thanks for the reply. I realized after my initial post that I could go
> to Schwab and do a "symbol lookup" and specify a Security Type of
> mutual fund, then enter "dividend" and "equity income" and get (I
> think) a fairly complete list. The Business Week screener is nicer
> than what I came up with since it has various metrics right there.
>
> Thanks again.
>
> Tom Young
>

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Tom,

Screen for Dividend Growth, Equity Income, Blue Chip Growth, and Growth
& Income.

best,

rono

TomYoung wrote:

> Hi all:
>
> How can one go about selecting and researching funds that invest mainly
> in common stocks that pay dividends? Typical "fund screeners" don't
> have this investment philosophy as a distinct "style" so you're forced
> to paw through long lists of "value" funds, the typical category for
> these funds. I've also tried searching for funds with Dividend or
> Equity-Income in their names, but that's a slow and tedious process.
>
> TIA.
>
> Tom Young
>

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Not sure you saw it in the news c. Sept. 23, but Vanguard will soon
introduce a new "dividend achievers" fund. Go to www.vanguard.com, then the
press room, and look for a Sept. 23 article on the new "Dividend Achievers
Index" fund.

"Vanguard today filed a registration statement with the Securities and
Exchange Commission (SEC) to offer a new equity index fund, Vanguard®
Dividend Achievers Index Fund. The new fund will offer both traditional
Investor Shares and exchange-traded VIPER® Shares."

I looked at the underlying shares of the index this fund will mimic, and the
stocks look very familiar. I figure the yield will be at least 2.5%, with of
course pretty reliable dividend growth, if history is any guide.

I can't find a symbol for this, so I gather one cannot yet actually buy
shares in it.

See also
for a
discussion of three ETFs that are also oriented towards dividends: PFM, PHJ,
PID.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"Elle" <> wrote

> I looked at the underlying shares of the index this fund will mimic, and
> the
> stocks look very familiar. I figure the yield will be at least 2.5%, with
> of
> course pretty reliable dividend growth, if history is any guide.

How many years of reliable dividend growth does it take to get way up to
2.5%?

On August 29, 1980 the S&P500 was yielding 5.38%, this August 29th it was
yielding 2.03%.
Is this what you call "reliable dividend growth"?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"Elle" <> wrote in message
news:MxT_e.4485$
> Not sure you saw it in the news c. Sept. 23, but Vanguard will soon
> introduce a new "dividend achievers" fund. Go to www.vanguard.com, then
the
> press room, and look for a Sept. 23 article on the new "Dividend Achievers
> Index" fund.
>
> "Vanguard today filed a registration statement with the Securities and
> Exchange Commission (SEC) to offer a new equity index fund, Vanguard®
> Dividend Achievers Index Fund. The new fund will offer both traditional
> Investor Shares and exchange-traded VIPER® Shares."
>
> I looked at the underlying shares of the index this fund will mimic, and
the
> stocks look very familiar. I figure the yield will be at least 2.5%, with
of
> course pretty reliable dividend growth, if history is any guide.
>
> I can't find a symbol for this, so I gather one cannot yet actually buy
> shares in it.
>
> See also
> for
a
> discussion of three ETFs that are also oriented towards dividends: PFM,
PHJ,
> PID.

Apparently the Vanguard fund will track the same index as PEY. Not sure why
Vanguard wants to release a "me too" ETF. I'd be interested in one that
takes a "Dogs of the Dow" approach. I own PEY, but the Mergent Index is a
market cap blend, and I'd prefer one limited to large cap dividend payers.

Mike

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"Ed" <> wrote in message
news:
>
> "Elle" <> wrote
>
> > I looked at the underlying shares of the index this fund will mimic, and
> > the
> > stocks look very familiar. I figure the yield will be at least 2.5%,
with
> > of
> > course pretty reliable dividend growth, if history is any guide.
>
> How many years of reliable dividend growth does it take to get way up to
> 2.5%?
>
> On August 29, 1980 the S&P500 was yielding 5.38%, this August 29th it was
> yielding 2.03%.
> Is this what you call "reliable dividend growth"? '

No. The term refers to the reliable dividend growth of the securities
selected for the portfolio. The Mergent index requires that companies
increase their dividends for each of the five previous years to be included
in the index, or something like that. In addition, stocks that have this
sort of dividend history also outperform the S*P500 in terms of price, so
you (supposedly) get the benefit of both.

Mike

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"MichaelC" <> wrote
> "Elle" <> wrote
> > Not sure you saw it in the news c. Sept. 23, but Vanguard will soon
> > introduce a new "dividend achievers" fund. Go to www.vanguard.com, then
> the
> > press room, and look for a Sept. 23 article on the new "Dividend
Achievers
> > Index" fund.
> >
> > "Vanguard today filed a registration statement with the Securities and
> > Exchange Commission (SEC) to offer a new equity index fund, Vanguard®
> > Dividend Achievers Index Fund. The new fund will offer both traditional
> > Investor Shares and exchange-traded VIPER® Shares."
> >
> > I looked at the underlying shares of the index this fund will mimic, and
> the
> > stocks look very familiar. I figure the yield will be at least 2.5%,
with
> of
> > course pretty reliable dividend growth, if history is any guide.
> >
> > I can't find a symbol for this, so I gather one cannot yet actually buy
> > shares in it.
> >
> > See also
> >
for
> a
> > discussion of three ETFs that are also oriented towards dividends: PFM,
> PHJ,
> > PID.
>
> Apparently the Vanguard fund will track the same index as PEY. Not sure
why
> Vanguard wants to release a "me too" ETF.

?

The Vanguard ETF (a.k.a. VIPER) version brings money to Vanguard. PEY does
not.

> I'd be interested in one that
> takes a "Dogs of the Dow" approach.

I would, too, but I recognize that this would demand more work and so a
higher fee, which might counteract any advantage to this approach.

> I own PEY, but the Mergent Index is a
> market cap blend, and I'd prefer one limited to large cap dividend payers.

What is your concern about mid-caps with the record required by the Mergent
Index?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"Elle" <> wrote in message
news:ShV_e.5054$
> "MichaelC" <> wrote
> > "Elle" <> wrote
> > > Not sure you saw it in the news c. Sept. 23, but Vanguard will soon
> > > introduce a new "dividend achievers" fund. Go to www.vanguard.com,
then
> > the
> > > press room, and look for a Sept. 23 article on the new "Dividend
> Achievers
> > > Index" fund.
> > >
> > > "Vanguard today filed a registration statement with the Securities and
> > > Exchange Commission (SEC) to offer a new equity index fund, Vanguard®
> > > Dividend Achievers Index Fund. The new fund will offer both
traditional
> > > Investor Shares and exchange-traded VIPER® Shares."
> > >
> > > I looked at the underlying shares of the index this fund will mimic,
and
> > the
> > > stocks look very familiar. I figure the yield will be at least 2.5%,
> with
> > of
> > > course pretty reliable dividend growth, if history is any guide.
> > >
> > > I can't find a symbol for this, so I gather one cannot yet actually
buy
> > > shares in it.
> > >
> > > See also
> > >
> for
> > a
> > > discussion of three ETFs that are also oriented towards dividends:
PFM,
> > PHJ,
> > > PID.
> >
> > Apparently the Vanguard fund will track the same index as PEY. Not sure
> why
> > Vanguard wants to release a "me too" ETF.
>
> ?
>
> The Vanguard ETF (a.k.a. VIPER) version brings money to Vanguard. PEY does
> not.
>
> > I'd be interested in one that
> > takes a "Dogs of the Dow" approach.
>
> I would, too, but I recognize that this would demand more work and so a
> higher fee, which might counteract any advantage to this approach.
>
> > I own PEY, but the Mergent Index is a
> > market cap blend, and I'd prefer one limited to large cap dividend
payers.
>
> What is your concern about mid-caps with the record required by the
Mergent
> Index?

Nothing specific. There's just more information readily available about the
history of dividend-paying large caps than mid, so that's where my comfort
level is.

Mike

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"MichaelC" <> wrote
> "Ed" <> wrote
> > "Elle" <> wrote
> >
> > > I looked at the underlying shares of the index this fund will mimic,
and
> > > the
> > > stocks look very familiar. I figure the yield will be at least 2.5%,
> with
> > > of
> > > course pretty reliable dividend growth, if history is any guide.
> >
> > How many years of reliable dividend growth does it take to get way up to
> > 2.5%?
> >
> > On August 29, 1980 the S&P500 was yielding 5.38%, this August 29th it
was
> > yielding 2.03%.
> > Is this what you call "reliable dividend growth"? '

Good lord you are stupid, Ed. "Change in yield" and dividend growth are not
synonymous. The S&P 500's dividends (not yields; pay attention, idiot) grew
over 4% each year since 1980, starting at about $6 in 1980 and achieving
over $16 today. (My data is from Shiller through 2003, though the 2005
numbers are consistent with this statement.)

You need to study what dividend growth means. It's an extremely important
topic for retirees.

> No. The term refers to the reliable dividend growth of the securities
> selected for the portfolio. The Mergent index requires that companies
> increase their dividends for each of the five previous years to be
included
> in the index, or something like that.

Right. From of an earlier link I provided:

"Mergent, which owns and maintains the indexes underlying the three new
ETFs, developed the proprietary methodology by which it identifies Dividend
Achievers as companies that have consistently increased their regular annual
dividends to shareholders for many consecutive years (10 years or longer for
U.S. companies, five years or longer for foreign companies)."

Finance.yahoo's blerb on PEY:
"[PEY] is comprised of the fifty highest yielding companies with at least
ten years of consecutive dividend increases. The yield-weighted portfolio is
rebalanced quarterly, and reconstituted annually."

By these criteria, I would have thought the Mergent index and PEY would end
up weighted heavily towards large caps. Morningstar has PEY listed as a
mid-cap (on average?) Value ETF.

OTOH, PEY's average market cap is 4.5 billion, which is just shy of the
cutoff with which I am familiar for large caps: 5 billion.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"MichaelC" <> wrote
E
> > What is your concern about mid-caps with the record required by the
> Mergent
> > Index?
>
> Nothing specific. There's just more information readily available about
the
> history of dividend-paying large caps than mid, so that's where my comfort
> level is.

I see what you mean. I have been screening in the last year or so for
dividend growth stocks with a much longer record than 10 years. Inevitably
these are large (or one level up, humongous yada, usually) cap.

OTOH, some mid and small cap companies arguably promise more potential for
principal growth. If the U.S. mid and small cap companies in the Mergent
index have a ten-year record of good dividend growth, that's good enough for
me right now. I guess as I get older, I'll want the arguably higher
reliability (lower risk) of companies with a much longer record of dividend
growth, like 30 years. Which means, as you imply, I'll hold more large caps
as I age.

It's worth investigating further. I'd be interested in seeing what the
average dividend growth of the Mergent index's constituents are, broken down
by large and mid cap. I'd also want to find out what percentage is
international, since five years is not very long for the international
positions.

PEY and similar certainly seem requisite to a good retirement portfolio, if
one believes in diversification at all.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"Elle" <> wrote

> You need to study what dividend growth means. It's an extremely important
> topic for retirees.

Will you be my teacher? I'll give you an apple.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

if an individual investor invests for dividends, the best measurement
is "dividends received", not yield.

I invest in dividend paying stocks and my measue of success is how much
income is generated. This removes market performance from the
equation. My share base generally stays constant (except for splits
and dividend reinvestments), so if a company increases dividend by $.01
each year, I see this in my analysis and this is my measure, the market
may have gone upward significantly in this one year. So my yield went
down, but my dividend grew.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"jIM" <> wrote

> if an individual investor invests for dividends, the best measurement
> is "dividends received", not yield.

If an investor is investing for dollars paid out he shouldn't be investing
in common stocks.

> I invest in dividend paying stocks and my measue of success is how much
> income is generated.

But at what cost? There is no success there. In 1980 the S&P500 was at
122.38 and the yield was 5.38% making the dividend $6.58. Today, the S&P500
is yielding 2.03% but the index is at 1227.68 making the dividend $24.92. I
would rather pay $122.38 and earn $6.58 any day of the week.

FWIW, for both time periods the dividend payout was not keeping up with
inflation.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

being much younger, I am sure I will be learning some lessons on my own
long after your fingers prevent you from typing...

my understanding is MOST of the S&P's returns over the years have come
from "reinvested dividends" and not growth of principle. The exact
numbers escape me, though.

in the numbers you gave, there were 500 stocks making up S&P, which
paid $6.58. 25 years later, there are 500 stocks, many of them
different, which pay $24.92. Is there any evidence to suggest that
most of these stocks are the same and have grown, or the dividends are
coming from new sources?

The biggest assumption made in the post from you was the stocks were
bought at the high point (so a person had to "pay" $1227 to get the
$24.92.). If I pay the $1227 now, I would expect the amount paid in
dividends to be much greater than $24.92 every other year I hold the
investment. So evaluating this model on todays dividend payout is not
the way I evaluate the situation.

But at same point, there may be merit to what you are suggesting, but I
am sticking to my guns at age 32 my dividends will be much higher based
the general trend of increasing dividend payouts.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"jIM" <> wrote

> my understanding is MOST of the S&P's returns over the years have come
> from "reinvested dividends" and not growth of principle. The exact
> numbers escape me, though.

It's not true. The S&P500 now is 1229, it was 122 in 1980. 1229/122=10.07
Dividends, $24.92/6.58=3.85
This is pretty simple stuff. Which did better?

> in the numbers you gave, there were 500 stocks making up S&P, which
> paid $6.58. 25 years later, there are 500 stocks, many of them
> different, which pay $24.92. Is there any evidence to suggest that
> most of these stocks are the same and have grown, or the dividends are
> coming from new sources?

Most of the stocks are different. So will they be with the powershares
index.

> The biggest assumption made in the post from you was the stocks were
> bought at the high point (so a person had to "pay" $1227 to get the
> $24.92.).

Don't think of it as the high point, think of it as now. Anyone considering
a fund or index will be buying it (or not) today, not in 1980. Wouldn't it
be nice.

> If I pay the $1227 now, I would expect the amount paid in
> dividends to be much greater than $24.92 every other year I hold the
> investment. So evaluating this model on todays dividend payout is not
> the way I evaluate the situation.

Just remember, at what cost?

> But at same point, there may be merit to what you are suggesting, but I
> am sticking to my guns at age 32 my dividends will be much higher based
> the general trend of increasing dividend payouts.

I can almost gaurantee you that if the S&P500 or the powershares index you
are interested in is sill around in 30 or 40 years then the dividend payout
will be higher. But that doesn't mean anything. Remember, at what cost?

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"jIM" <> wrote
> being much younger, I am sure I will be learning some lessons on my own
> long after your fingers prevent you from typing...
>
> my understanding is MOST of the S&P's returns over the years have come
> from "reinvested dividends" and not growth of principle. The exact
> numbers escape me, though.

Looking at the return each year (1) with dividends and (2) without them,
then averaging, yields returns of (1) 14.2% and (2) 10.7% on average per
annum for the years 1980-2003. I'm using Shiller's data.

I just say that reinvested dividends are a non-trivial part of stock
returns.

> in the numbers you gave, there were 500 stocks making up S&P, which
> paid $6.58. 25 years later, there are 500 stocks, many of them
> different, which pay $24.92. Is there any evidence to suggest that
> most of these stocks are the same and have grown, or the dividends are
> coming from new sources?

I'm not sure what your concern is. What difference does it make if they're
different? What do you mean by "new sources"?

You seem to know that large companies' dividends in absolute dollars tend to
increase, while the yield tends to stay the same. The criteria for the S&P
500 will tend to exclude smaller companies. VFINX, Vanguard's famous S&P 500
index fund, is only 10% medium and small cap, and 90% large and giant cap.

I'd argue there is a pretty close cluster of all 500's yields around a
certain dividend yield, so the growth of a "typical" 500 company of course
will tend to track the S&P 500. (That's a bit of a tautology.)

GE's dividend history back to 1980 at


GE's dividend growth is probably a little high or about average for large
caps. Its dividend has increased about 11% a year on average for the last
ten years.

Morningstar.com will give the last five years of dividend growth for
companies at least that old.

> The biggest assumption made in the post from you was the stocks were
> bought at the high point (so a person had to "pay" $1227 to get the
> $24.92.). If I pay the $1227 now, I would expect the amount paid in
> dividends to be much greater than $24.92 every other year I hold the
> investment. So evaluating this model on todays dividend payout is not
> the way I evaluate the situation.
>
> But at same point, there may be merit to what you are suggesting, but I
> am sticking to my guns at age 32 my dividends will be much higher based
> the general trend of increasing dividend payouts.

Yes, they eventually will be much higher, based on the original investment.
The yield may not vary much, though, because the principal (= stock price)
will tend to grow, and there will be spinoffs, etc. (Presumably you know
this; for the newbies etc.)

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Elle, I can't believe how stupid you are.
PhD and a dummy. A mind is a terrible think to waste.

Re: Finding Funds that Invest in Dividend-Paying Stocks?

"jIM" <> wrote in message
news:
> being much younger, I am sure I will be learning some lessons on my own
> long after your fingers prevent you from typing...
>
> my understanding is MOST of the S&P's returns over the years have come
> from "reinvested dividends" and not growth of principle. The exact
> numbers escape me, though.
>
> in the numbers you gave, there were 500 stocks making up S&P, which
> paid $6.58. 25 years later, there are 500 stocks, many of them
> different, which pay $24.92. Is there any evidence to suggest that
> most of these stocks are the same and have grown, or the dividends are
> coming from new sources?

Jeffrey Siegel analyzes this question (in more detail than you'd care to
know, most likely) in the book The Future for Investors.

Mike


>
> The biggest assumption made in the post from you was the stocks were
> bought at the high point (so a person had to "pay" $1227 to get the
> $24.92.). If I pay the $1227 now, I would expect the amount paid in
> dividends to be much greater than $24.92 every other year I hold the
> investment. So evaluating this model on todays dividend payout is not
> the way I evaluate the situation.
>
> But at same point, there may be merit to what you are suggesting, but I
> am sticking to my guns at age 32 my dividends will be much higher based
> the general trend of increasing dividend payouts.
>

Re: Finding Funds that Invest in Dividend-Paying Stocks?

Elle wrote:
> I see what you mean. I have been screening in the last year or so for
> dividend growth stocks with a much longer record than 10 years. Inevitably
> these are large (or one level up, humongous yada, usually) cap.
>
> OTOH, some mid and small cap companies arguably promise more potential for
> principal growth. If the U.S. mid and small cap companies in the Mergent
> index have a ten-year record of good dividend growth, that's good enough for
> me right now. I guess as I get older, I'll want the arguably higher
> reliability (lower risk) of companies with a much longer record of dividend
> growth, like 30 years. Which means, as you imply, I'll hold more large caps
> as I age.
>
> It's worth investigating further. I'd be interested in seeing what the
> average dividend growth of the Mergent index's constituents are, broken down
> by large and mid cap. I'd also want to find out what percentage is
> international, since five years is not very long for the international
> positions.
>
> PEY and similar certainly seem requisite to a good retirement portfolio, if
> one believes in diversification at all.

There's some screened dividend growth stock lists here -


dd