| 2006 is another strong year for
| |
| | traditionally paid generous dividends and
|
| dividends. For the third year in a row,
| |
| | increased them in order to make their
|
| a growing number of companies have either
| |
| | stocks appealing to investors.Our firm
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| increased their dividends or begun paying
| |
| | continues to recommended equity income
|
| dividends. In addition, more investors
| |
| | funds to clients as core holdings in a
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| are paying attention to the solid
| |
| | diversified portfolio, as a part of their
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| companies that are capable of paying
| |
| | college savings plan or to produce
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| dividends. That is a big change from the
| |
| | reliable quarterly income in retirement.
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| late-1990s, when investors by and large
| |
| | While these holdings have delivered above
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| shunned yields and many companies
| |
| | average returns for years, it is
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| refrained from paying them, so that stock
| |
| | important to remember that it is not the
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| market yields in the U.S. plunged to
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| | objective of the funds to beat a stock
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| unprecedented lows. History shows,
| |
| | market index such as the S&P 500. (The
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| though, that over longer periods of time
| |
| | S&P 500 consists of 500 stocks
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| dividends have always been an essential
| |
| | representing major US industry
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| component of total return, regardless of
| |
| | sectors.)It is the objective of the funds
|
| which direction the market has headed.
| |
| | to provide an attractive long-term return
|
| Between 1926 and 2004, dividends
| |
| | by pursuing a conservative strategy
|
| accounted for roughly 40% of the average
| |
| | focused on providing above-average
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| annual return of the U.S. stock
| |
| | current income and growth of dividends
|
| market.Another impetus for the dividend
| |
| | over the years. Although the majority of
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| resurgence, of course, has been the Jobs
| |
| | assets have typically been held in U.S.
|
| & Growth Tax Relief Reconciliation Act of
| |
| | based companies, the funds have the
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| 2003, which lowered the maximum tax rate
| |
| | flexibility to invest anywhere in the
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| on long-term capital gains and qualified
| |
| | world. In the past, the U.S. stocks
|
| dividends to 15%. With a more level
| |
| | provided some of the most reliable
|
| playing field between the taxation of
| |
| | dividend income in the world. Now, the
|
| capital gains and dividends, companies
| |
| | U.S. is a relatively paltry source of
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| can more clearly decide what allocation
| |
| | dividend income, and superior yields and
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| of capital is best for shareholders over
| |
| | dividend growth come from companies based
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| the long-term rather than what is more
| |
| | in Europe and Asia. Many of these equity
|
| tax-efficient.There are relatively few
| |
| | income funds feature low expenses,
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| individual securities that provide a high
| |
| | experienced managers, limited volatility
|
| current yield and grow their dividends,
| |
| | and steady long-term performance.(Review
|
| so the challenge for portfolio managers
| |
| | the prospectus before investing. Past
|
| is to build a portfolio of companies
| |
| | performance is no indication of future
|
| that, as a whole, meet both criteria.
| |
| | results.)Source: Triump of the Optimists,
|
| That requires in-depth,
| |
| | 101 Years of Global Investment Returns,
|
| company-by-company, and increasingly,
| |
| | Dimson-Marsh-StauntonRafael O. Velez III
|
| global research. The search often begins
| |
| | is the Managing Director and Registered
|
| on familiar terrain. Electric utilities,
| |
| | Principal of Summit Financial Advisors,
|
| oil and gas companies, real estate
| |
| | LLC, based in San Mateo, California.
|
| investment trusts and banks are classic
| |
| | Additional resources and ideas are
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| examples of sectors that have
| |
| | offered on their Web site, .
|
