As the nation’s population continues to age and live longer, many investors want and need a conservative way to maintain their wealth-building strategy while gaining a source of current income.
Fixed income investments have long played an essential income-generation and principal-protection role. Now, equity income investing, which focuses on dividend-paying stocks, is gaining increased attention as a potential conservative growth and income-generating strategy.
Allocating a portion of a diversified portfolio to equity income may help an investor stay calm and committed to a long-term strategy when markets fall.
Help Manage Inflation
Over time, stocks have delivered solid returns that exceeded the rise in the inflation rate, and dividend-paying stocks have helped provide protection against inflation. Unlike bond invest-ments, a company may increase its dividend payments, which can serve as a buffer from the rising costs of goods and services.
Can Your Portfolio Benefit From Equity Income?
Now is the time to learn more about the role of equity income in your long-term strategy and if the strategy is right for you. For more information, contact a Dreyfus representative at 1-800-443-9794.
As the Name Implies, Equity Income Seeks Capital Gains and Income
There are four topical, real-world reasons that investors often nd dividend-paying stocks appealing:
Typically, dividend-paying stocks represent well-established and healthy companies. Combining yield and growth provides long-term capital appreciation opportunities and may enhance returns as dividends often make up a signi cant portion of total return.
In the current low-yield environment, investors may be attracted to high-quality equities as a way to generate income that exceeds the income derived from traditional bond investments.
Dividend-paying stocks may be able to sustain volatility better than other equity opportunities because of “yield support.” This means the ongoing dividend income provides a cushion during market downturns. This is a crucial concern for many investors and leads to the next point.
When equities dramatically fall, it’s understandable that some investors panic and contemplate moving to the sidelines. The drawback is this can disrupt one’s well-constructed asset allocation plan and long-term strategy. It’s important to know that, historically, S&P 500 dividend payers outperformed non-dividend payers over time with lower volatility than the overall market.