Three ways to spot dividend gems

Dividends matter. And now could be the perfect time to snap up a dividend bargain, says Tim Bennett. Here are three ways to spot stocks that will yield secure and handsome dividends.

Dividends matter a lot. Research from Barclays Capital shows that, since 1925, 44% of the overall return from S&P 500 shares came from reinvested dividends. Anyone who thinks that sounds high should remember that every £1 of dividends reinvested in shares in 1941 has had 70 years to compound upwards at the same rate as stocks have grown over that period. Effectively, by reinvesting, you are getting paid dividends on your dividends.

And according to Graham Secker at Morgan Stanley, now could be the perfect time to snap up a dividend bargain. Its latest research points out three ways to identify dividend gems.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.