The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Dividends are an investor’s best friend. According to Standard & Poor’s, over the past several decades, about 40 per cent of the total return of the S&P 500 can be attributed to the reinvestment of dividends.
Dividends are an investor’s best friend. According to Standard & Poor’s, over the past several decades, about 40 per cent of the total return of the S&P 500 can be attributed to the reinvestment of dividends.
(Jupiterimages/Photos.com/www.jupiterimages.com)

The most important metric for dividend investors

Successful income investing is all about yield. The key to building a productive portfolio is to choose securities that provide good cash flow, consistent with your risk comfort level, while maintaining or increasing their market value.

There’s no trick to creating a portfolio that returns 2.25 per cent each year. Just plunk the money into five-year GICs and forget it. But for most income-oriented investors, that’s not enough. They want yields of 4 per cent or higher from their investments and may not consider anything that doesn’t meet that benchmark.