Dividend-Paying Securities

Consistent with the firm’s growth-and-income strategy, Cutler focuses on dividend-paying securities, because of the impact dividends can have on total returns.

Impact on total returns:
During the past 30 years, dividends have accounted for nearly a third of the total return of the S&P 500, according to Standard & Poor's. In addition, dividends reduce downside risk. If $10,000 were invested in the S&P 500 in 1972, today it would be worth $208,972 if all dividends were reinvested and only $74,547 if dividends were not reinvested. Past performance is no guarantee of future performance.

View Chart 7: Effects of Compounding Dividends

Favorable Tax Status
Instead of paying taxes on dividends at their income tax rate, most investors can now pay at a rate of only 15%. As a result, stocks with dividends are especially attractive. Since federal legislation reduced taxes on dividends, more companies have begun to offer dividends.

Past performance is no guarantee of future results.