Investors looking for stocks that can outperform want to turn their attention to dividend payers, regardless of whether they’re interested in building a passive income stream. Companies that pay dividends tend to outperform those that don’t, and the differences are dramatic.
From 1973 through 2024, the average dividend-paying stock in the benchmark S&P 500 index delivered a 9.2% annual return. Non-dividend-paying stocks in the same index produced a measly 4.3% annualized return over the same time frame, according to Hartford Funds and Ned Davis Research.
The past 12 months have been relatively rough periods for Novo Nordisk (NYSE: NVO) and Realty Income (NYSE: O). Shares of the real estate investment trust (REIT) are down by 10% from the peak they set last fall. Novo Nordisk has fared much worse. Its stock has been beaten down more than 60% from a peak it set last year. Here’s why most investors would do well to buy both while they’re down and hold them for at least a decade.