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Market Decode: The Benefits of Dividend Stocks

The change in the price of a stock isn’t the only thing investors should consider in measuring its performance over time. As Mary Ann Bartels, head of Merrill Lynch Wealth Management Portfolio Strategy, explains dividends could be an important part of the total return you receive.

As the graphic below illustrates, dividends could help boost the total return you receive from an investment in a stock, stock mutual fund or Exchange-Traded Fund. In this example, the S&P 500—a key benchmark for U.S. equities—returned 168 percent on a price basis during a recent 20 year period. But add in reinvested dividends and the total return increased to 288 percent.1


Past performance does not guarantee future results.
Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time.

3 Questions to Ask Your Advisor

  1. Could dividend-paying stocks help me meet my need for investment income, while also providing me with some growth?
  2. How can I tell which companies could be growing their dividends over time?
  3. What companies or sectors typically offer the highest dividend yields to their shareholders?

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1 Source: Bloomberg, LP and Bank of America Merrill Lynch Research, as of 11/28/17

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