Invesco's Stellini: Beware income stocks that promise the earth

There are two widely accepted views about equity income investing.

The first is that dividends and their reinvestment have been a major contributor to investors, total return over any medium to long term time frame. One illustration of this is Fig 1, which shows that since 1970, dividends have accounted for almost all of investors, returns in most developed markets.                 The second is that, on average, dividend paying companies are lower volatility investments than their non-paying cousins. Looking at Fig 2 would seem to back this view up for the US. While we would accept the first view, we believe the second const...