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Life is often about give and take. You want a specific feature, but it only comes with the super deluxe model that’s out of stock, and who has time to wait? You end up shifting your expectations. 

There’s also a give and take element for investors. When market volatility looms, we look for ways to reduce risk in our portfolio, which could mean sacrificing growth potential.  

But, through dividend-paying stocks, investors may be able to have the best of both worlds. Not only do dividend-paying stocks offer growth potential, but they’ve also tended to be less volatile than the market overall—while generally providing a source of income, too.


Steady As They Go
Dividends are payments made by a company on a regular basis, often monthly or quarterly, to return some of their profits to shareholders. They’re typically offered by large companies with well-established financial footings. 

Because they’re generally the stalwarts of the business world, dividend-paying stocks have historically been less volatile than both the broader market and their non dividend-paying counterparts, which has helped them noticeably outperform (FIGURE 1).

What’s more, companies are sitting on near-record high amounts of cash.1 In a world with geopolitical, economic, and overall market uncertainty, cash-rich companies could be well-positioned to provide investors with an attractive income stream.  


Dividend-Paying Stocks Have Outperformed 
Growth of $10,000 (2004-2023)

As of 12/31/23. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. The equal-weighted index gives each of the 500 stocks in the S&P 500 Index equal statistical importance rather than weighting the stocks by market capitalization, as is typical. Ned Davis Research divided companies into two groups based on whether or not they paid a dividend during the previous 12 months: “dividend payers” and “dividend non-payers.” For each category, a total-return geometric average was calculated with monthly rebalancing. Data Sources: Ned Davis Research and Hartford Funds, 2/24.

It’s important to note that dividend payouts are a perk, not a guarantee. Companies can start or stop paying a dividend at any time. And as with all stocks, dividend-paying stocks are subject to the ups and downs of the stock market, so be sure they’re a good fit for you before investing.

Best of Both Worlds?

In summary, dividend-paying stocks may offer investors growth with less volatility relative to their non-dividend paying peers, and could provide a source of income to boot. In other words, investors may be able to enjoy the benefits of both worlds. 


Ask your financial professional if dividend-paying stocks are a good fit for your portfolio.

1 Source: US Federal Reserve as of Q3 2023
S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

Important Risks: Investing involves risk, including the possible loss of principal. • For dividend-paying stocks, dividends are not guaranteed and may decrease without notice. • Different investment styles may go in and out of favor, which may cause a fund to underperform the broader stock market. 

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The material on this site is for informational and educational purposes only. The material should not be considered tax or legal advice and is not to be relied on as a forecast. The material is also not a recommendation or advice regarding any particular security, strategy or product. Hartford Funds does not represent that any products or strategies discussed are appropriate for any particular investor so investors should seek their own professional advice before investing. Hartford Funds does not serve as a fiduciary. Content is current as of the publication date or date indicated, and may be superseded by subsequent market and economic conditions.

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