Dividends as a key to asset structure: how long -term investment and regular distributions make the difference (photo: freepik, vecstock)
Warren Buffett has shown it: If you are relating to companies, distribute dividends rising year after year, a steadily growing passive income is building up. Why dividends are the turbo for long -term assets – and how investors can benefit from funds and ETFs.
The secret of the oracle of Omaha
He knows how it works: Warren Buffett, probably the best -known investor of our time, has experienced ups and downs on the stock exchange. But a rule remains inviolable for him: “If you do not make any money in your sleep, you will work until the end of your life.” His recipe for success? Long -term investments in companies with sustainable dividend yields.
A prime example is his participation in Coca-Cola. Buffett has been holding the stock since the 1980s-and benefits from a dividend yield that is now over 70 percent on his entry-level course. His mantra: “Time in the Market Beats Timing the Market.” So it is not crucial when you buy, but how long you will stay invested. Because true magic does not develop through a short -term high dividend yield, but through the continuous increase in distributions over the years.
Dividends: The Rendite Booster
A look at the German leading index DAX also shows how much dividends influence the overall return. While the pure course DAX has increased by around 100 percent in the past 5 years, the performance DAX, which rejects the dividends, has over 140 percent-a relatively short period of more than 30 percentage points in this relatively short period of time. Over the age of 30, the lead is even 2.5 times.
Long-term studies such as that of UBS, for example, are even more impressive: who has invested in US shares since 1900 and have always reinstated the dividends, multiply their use by a factor of 134-more than $ 2,000 became more than $ 2,200 from one dollar. Without dividends, however, the return was only 18.
The best dividend payers: stability beats height
But not everyone Dividend share is automatically a worthwhile investment. A high dividend yield can be deceptive, because it is often artificially inflated by a drop in the course. The resistance of the distributions is therefore much more important. In this context, the so -called Dividend aristocrats – Companies that have increased their dividend for at least 25 years year after year. This includes corporations such as:
- Altria -The Marlboro manufacturer with one of the most stable dividend history worldwide.
- Church & Dwight – The producer of consumer goods such as baking powder and toothpaste.
- Cintas – A specialist for work clothes and washing services.
The dividend kings that have increased their distributions for over 50 years without interruption are another stage. Among other things, this elite league play:
- Procter & Gamble – The consumer goods giant with brands such as Pampers and Ariel, which not only reliably pays dividends, but also offers steadily increasing distributions.
- Coca-Cola – The drink giant that Warren Buffett has loved in decades and who continues to convince with his stable dividend policy.
- American States Water – A less well -known, but no less impressive dividend king, which has not only offered its investors stable but also continuously increasing distributions for decades. The water supplier benefits from long -term contracts and stable cash flows, which makes it a reliable source of dividends.
These companies are parade examples of the power of dividend growth and show how important it is to invest in companies with a long -term dividend strategy.
Dividend funds and ETFs: The smart alternative
Selecting the right individual shares requires a lot of time and appropriate know-how. Investors who want to rely on a wide scatter therefore prefer to use funds or ETFs with a focus on dividend shares. Indexes such as the MSCI World High Dividend Yieldthat bundles companies with a solid dividend policy worldwide.
The advantage: Dividend funds are often less susceptible to fluctuations than other equity funds because they rely on established quality companies. In addition, the distributions work like an airbag, especially in troubled times – even if the courses fluctuate, the passive income remains.
In addition, while corporate profits can collapse in crises, dividends often remain more stable. Therefore, dividend strategies are particularly suitable for investors who value regular yields and quiet sleep.
Panting or thesauring – what fits better?
When choosing the right dividend fund or ETFs, there is a central question: Should the dividend be paid out or created directly?
- Distributing fund (often with the abbreviation “Dis” for distribution characterized) the yields pay regularly – ideal for investors who are looking for a passive income.
- Ends (characterized with “Acc” for accumulation) automatically create the dividends – perfect for long -term assets.
Caution, dividend trap! Why high returns are not always good
Dividends are tempting – but not every high distribution is a reason to be happy. Solid values are usually between 3 and 5 percent. Those who are clearly above can fall into a trap. Because there are often losses of price that drive up a supposedly lush return. And if the cake appears too big, you should ask yourself: Is it still fresh?
A prime example of this is that Global X Superdividend ETF (ISIN: IE00077FRP95). With a distribution return of over 11 percent, he sits enthroned at the head of the dividend hunters. But appearance is deceptive: the ETF almost exclusively relies on high distributions – and often ignores the quality of the companies. The result? A depot full of wobbly candidates in which dividend cuts are only a matter of time.
The receipt for this is shown in performance: minus 20 percent in 3 years – despite reinvested distributions. A bitter setback, especially in years in which the stock exchanges ran steeply. So investors do well not only to squint at high dividends, but to question the strategy behind it. Because what use is a fat distribution if the loss of price is eaten up again?
Three actively managed dividend funds in check:
Three Dividend ETFs in focus-global, Europe and Asia:
Conclusion: Why dividend strategies are unbeatable
Dividends are the underestimated return turbo for long -term investors. Companies with stable distributions not only provide regular yields, but often also shine with a solid business basis. Especially in uncertain times, dividend shares are a rock in the surf – and with the right selection of funds or ETFs, every investor can benefit from this proven principle. Because one thing is certain: while speculators are looking for a quick profit, the real prosperity builds up with dividends – according to the Motto by Warren Buffett: “The stock market is designed to transfer money from the active to the patient.”
Disclaimer:
No investment advice. No call to buy or sell securities.