A previous article, “No Matter What Happens at the Polls, Buy Dividend Stocks,” laid out the case for buying stocks with strong dividend components, no matter which party did well in the mid-term elections in the United States on November 4, 2014.
Well, the Republicans had a great night. That makes the case for dividend stocks. Even if the Democrats had done well, however, investors should still be buying fine dividend stocks like Chevron (NYSE: CVX), PepsiCo (NYSE: PEP), and McDonald’s (NYSE: MCD).
No matter which party is in power, for the long term, equities that pay dividends will be rewarding investments.
There are many reasons why all who buy stocks should be income investors, in part. The income component of a stock has provided over 40 percent of the historical return, according to legendary investor John Neff, founder of the Vanguard Group of mutual funds. In a down market, the dividend payment is the only positive return for an investor. At all times it will provide a constant, steady stream of cash flow that all investors need from a portfolio.
McDonald’s, Chevron, and PepsiCo all have a history of dividend growth, too.
Each has increased the amount of the dividend annually for over 25 years. Publicly traded companies that do that are called “Dividend Aristocrats.” There should be a spot in the holdings of every investor for a Dividend Aristocrat stock. A major reason is that the shareholder gets a raise every year when the dividend amount is increased simply for not selling the stock.
It is difficult to argue that the Republicans will be better for the stock market when it is in the fifth year of a bull market.
But great companies like McDonald’s and PepsiCo will always reward. And Big Oil companies like Chevron generally do better with Republicans in control (especially when from Texas). Most important of all, no matter who is in The White House or one charge on Capitol Hill, investors should always own income stocks for the long term!