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Brian and Bo tackle the challenge of explaining how yield can affect the overall performance of a portfolio. They share historical numbers and some great quotes that reference the importance of making solid investments that keep dividend yield in mind.
This week’s show is based on a book the guys read on vacation: Shareholder Yield- A Better Approach to Dividend Investing By: Mebane Faber. We put together a summary that highlights the key statistics from the book. These points help illustrate the relationship between dividend yield and portfolio return.
A word of caution now that you know how important yield is to your portfolio. Most companies in the S&P 500 have a positive net payout yield. That’s not to say the shareholder will receive a portion if any of that payout. There are companies that are trying to dilute shareholders, and these companies are not always easy to spot. Half of the 95 companies with a negative payout yield actually had positive dividends (12 with a yield over 3%).
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