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By Josh Peters, CFA | 01-07-2015 05:00 PM

Peters: Dividend Lessons From the Last Decade

As Morningstar DividendInvestor turns 10, editor Josh Peters looks back at how his portfolios have performed and what he has learned.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm here with Josh Peters. He is the editor of Morningstar DividendInvestor newsletter and also our director of equity-income strategy. His portfolios recently crossed the 10-year mark. We're here to take a look back and see how performance has been and what lessons he's learned. Josh, thanks for joining me.

Josh Peters: Good to be here, Jeremy.

Glaser: Let's start with that performance number. Now that you have 10 years under your belt in running these portfolios, what did those numbers look like versus a broad-based index like the S&P 500?

Peters: I don't normally target trying to beat the market over any short-term interval, like a quarter or a year. I figure you're going to own a very different group of stocks than the market average if you're going to target those high yields, so you shouldn't expect to behave like the market. But having reached the 10-year mark, it's very gratifying to see that without even trying, so to speak, we have beaten the S&P 500. Since inception, our annualized total return is 9.4%, and that compares to 7.7% for the S&P 500. It's actually a little better in comparison even to some higher-yielding indexes that over this same 10-year span have returned a little bit less than the S&P 500.

So, I think, looking back over 10 years, total return is the bottom line for any investment strategy, whether it's focused on capital gains or income. At the end of the day, you need both in order to have a good result. It's quite gratifying to see that the strategy we set out with 10 years ago has, in fact, worked so well over a long time period here.

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