Looking for a way to build wealth, sleep soundly during market storms, and enjoy steady cash flow? Jenny Harrington, CEO of Gilman Hill Asset Management and author of Dividend Investing: Dependable Income to Navigate All Market Environments, makes a compelling case for why dividend investing is a winning strategy in today’s unpredictable world.
“Dividend income provides emotional comfort, emotional comfort encourages good investment behavior and good investment behavior creates superior results,” Harrington writes.
As U.S. companies paid a record $565 billion in dividends in 2022 and tech giants like Microsoft became the world’s largest dividend payer, the landscape is shifting: more blue-chip and even tech companies are returning cash to shareholders, not just promising future growth.
Consistent Reliable Income in Any Market
Dividend stocks generate steady income regardless of market volatility. Jenny Harrington highlights the emotional comfort this provides during challenging times, saying, “Your income remains intact. You need not worry about its safety.”
That sense of assurance can significantly reduce panic selling during downturns. Imagine earning money while others are glued to screens, monitoring daily market dips. That’s the magic of dividend investing!
Dividend Yields Are Attractive
Who doesn’t love an attractive yield? Harrington’s top picks yield around 5%, which is significantly higher than the average returns from the S&P 500. “Harrington aims to establish a reliable income stream of at least 5% for her clients. Each company undergoes thorough fundamental analysis with a focus on whether it can sustain income during challenging environments like the one we currently face,” notes CNBC.
Harrington’s top dividend picks—such as Conagra and Ryman Hospitality Properties—provide yields that are three to five times higher than the S&P 500 average ( hovered between 1.27% and 1.36% in 2025). Conagra’s current dividend yield is approximately 6.1%–6.3%, well above the market average. The company pays quarterly dividends, with recent annual payouts totaling $1.40 per share. Wouldn’t it be nice to get paid just for holding onto a solid stock?
Beats Inflation With Dividend Growth
Is inflation keeping you up at night? Don’t worry. Dividends have your back. S&P 500 companies saw dividends grow 6% in 2024, and projections for 2025 suggest an even healthier 8% growth rate. That’s not just keeping up with inflation; it’s beating it. According to Ameriprise data, the expected 8% dividend growth in 2025 reflects pent-up demand and improved corporate optimism after policy uncertainties in 2024.
This growth is supported by increasing free cash flow levels, which enable companies to raise dividends and buy back shares more confidently. This means dividend investors aren’t just preserving their buying power; they’re growing it.
Stabilizes Your Portfolio With Lower Volatility
Here’s a fact to love: Dividend-paying stocks are less volatile than non-dividend payers. Research shows dividend stocks suffer fewer declines during bear markets. During bear or sideways markets, dividends often account for the majority of total returns. For example, between 1900 and 2000, dividends made up 90% of returns in sideways markets, compared to just 19% in bull markets.
As finance professor Jeremy Siegel notes, dividends serve as both a “bear market protector” and a “return accelerator” once stock prices recover. Think of dividends as a financial shock absorber for your portfolio. Even when markets wobble, your income stays rock steady.
Dividends Boost Long-Term Returns
Did you know dividends have historically contributed around 75% of the S&P 500’s total returns from 1980 to 2019? Dividends aren’t just a small cherry on top; they’re a big slice of the cake. If you’re aiming to compound wealth over time, focusing on dividends is one of the smartest moves you can make.
For example, while the S&P 500 index price alone grew by 17.9 times over this period, the same investment with dividends reinvested would have grown by 52.9 times—demonstrating the powerful compounding effect dividends provide.
This means that, over the long run, the majority of stock market gains have come not just from price appreciation but from the steady and growing stream of dividends paid out to shareholders and reinvested over time.
Tax-Advantages Sweeten the Deal
Dividends don’t just make you money; they save you money, too. Qualified dividends in the U.S. are taxed at lower rates (0% to 20%), depending on your taxable income and filing status, unlike ordinary income (up to 37%) from other investments.
For the 2025 tax year, single filers pay 0% on qualified dividends if their taxable income is up to $48,350, 15% for income between $48,351 and $533,400, and 20% above $533,400. For married couples filing jointly, the 0% rate applies up to $96,700, 15% up to $600,050, and 20% above that. For high-income earners, this is a game-changer.
Prioritizing Quality Companies
Here’s a little secret about dividend-paying companies: they tend to be high-quality. Companies that consistently pay—better yet, grow—dividends often have stable earnings, great leadership, strong cash flow, and robust balance sheets. Companies with a history of raising dividends, such as Dividend Aristocrats, typically have robust cash flows, stable earnings, and disciplined capital allocation.
For instance, firms like Roper Technologies, West Pharmaceutical Services, Sherwin-Williams, and McDonald’s have increased their dividends for decades, backed by ample free cash flow and prudent payout ratios. Harrington’s meticulous screening process ensures that dividend investors avoid “dividend traps” and stick with financially solid companies.
Stands Strong Through Economic Ups and Downs
Economic cycles don’t scare dividend believers. Dividend stocks have weathered past downturns, including the 2008 global financial crisis and the COVID-19 pandemic. Companies that maintained or even increased their dividends during these tough times stand out as pillars of resilience.
For example, during the 2008 financial crisis, dividend stalwarts like Verizon and utilities such as WEC Energy and Public Storage continued their dividend streaks and outperformed the S&P 500, which lost 55% during the downturn.
Exxon Mobil, with its uninterrupted dividend streak since 1882, lost only 28% in the same period, underscoring the defensive nature of reliable dividend payers. And as Harrington notes, focusing on such companies ensures stability and peace of mind.
Unlocks the Power of Compounding
Albert Einstein once called compound interest the “eighth wonder of the world.” Reinvesting your dividends magnifies this effect. For example, reinvesting dividends at an 8% annual growth rate can turn a $5,000 investment into over $24,000 in 20 years. Without dividends, that same investment would grow to just $16,000 at a 6% annual growth rate!
The longer you invest and reinvest dividends, the more pronounced the effect becomes, as each round of dividends buys more shares, which then generate even more dividends in the future. That’s the power of compound magic at work.
Riding Growing Market Trends
In 2024, major technology companies, including Alphabet (Google), Meta Platforms (Facebook), and Salesforce, initiated their first-ever dividend payouts, joining Microsoft and Apple as regular dividend payers. This means five of the “Magnificent Seven” tech giants now pay dividends, with only Amazon and Tesla yet to join.
Nasdaq-100 companies, for example, declared record-breaking dividends in 2024, with three of them ranking among the top 15 global dividend payers. Harrington emphasizes that this trend expands the scope for investors, giving them access to even more high-quality dividend-paying stocks across different sectors.
“There will be more and more opportunities for dividend growth investors to buy technology stocks,” says Tom Huber, portfolio manager for the T. Rowe Price Dividend Growth fund.
Why Jenny Harrington Is Your Dividend Investing Go-To Expert
Jenny Harrington isn’t just an advocate for dividend investing; she lives and breathes it. Her personal experiences have shaped her approach. Growing up in a family of entrepreneurs with “very high highs and very low lows,” Harrington understands the importance of steady income. She developed a strategy to ensure her clients experience financial stability, even in tumultuous markets.
To identify worthy dividend stocks, she focuses on the following:
- Dividend yield (preferably over 3.5%)
- Market capitalization (over $150 million)
- A company’s history of maintaining dividends during crises
- Earnings stability and future growth potential
- Low volatility sectors driven by resilient cash flow
This meticulous screening ensures investors steer clear of risky stocks while maximizing returns.
Disclaimer – The Finance Key does not provide and does not intend to provide financial, investment, tax, or legal advice. Information contained in this article is for informational and educational purposes only. This list is solely the author’s opinion based on research and publicly available information. The inclusion of links to third-party content is not an endorsement by The Finance Key of such content or services. Please do your due diligence and use your discretion.
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