Why Dividends Matter

Mergent’s, which maintains the dividend achievers indexes, has come up with the following list of why dividends matter:

1 - Companies that pay regular dividends tend to be in better financial health and produce sustained earnings and revenue growth.

2 - Dividends help identify well-managed companies; every dividend declaration represents a promise by management and a vote of confidence by the board of directors in the company's leadership.

3 - Companies that consistently raise their dividend payouts also raise the bar on their own performance expectations

4 - Shares of dividend-paying companies possess built-in value that makes them generally more resilient in down markets, with solid appreciation potential during earnings-driven market upturns-with less price volatility