Investors Turn To Dividend-Paying Stocks

Wednesday, March 1, 2006

Investors Turn To Dividend-Paying Stocks (NAPSA)—With stubbornly low yields on Treasuries, traditional fixed-income investors have suffered a long dry spell with little income. While long-term rates have been headed upwardsoflate, rising yields on longer duration fixed-income assets are but small consolation in the face of a potential rise in inflation. After all, cap- ital depreciation has a damning effect on a bondholder’s total return. Luckily, there is another attractive option for the income- oriented investor. As we face an environment of persistently lower equity and bond returns, Boston- a company’s track record of increasing annual dividends as a way of exhibiting shareholder friendly behavior. Further, 80 percent said they think a firm’s divi- dend growth rate can give investors confidence in the Investor preference has shifted, investing towards a more value- elist and senior index strategist style.” This has not always been vices Unit. Many investors are recovering from stock declines says Eaton Vance’s executive vice president and chief equity investmentofficer, Duncan W. Richardson, “from an emphasis on growth oriented, conservative investment the case though. Richardson elaborated, “In the 1990s investors pre- dividends will play an increas- backs—which increase reported retiring baby boomers. More Dividends have returned to popularity, and value investing has ingly larger role in investment strategies—particularly those of investors will also come to appreciate the tax-advantaged income such equities can provide. In a study conducted late last year by Eaton Vance, senior finance executives at dividend- paying American corporations agreed that investors are more frequently turning to stocks that pay dividends. The results of a separate Eaton Vance study of individual investors showed that a major- ity of the individual investors polled indeed had a positive view of companies that pay dividends. Survey respondents said they see dividend payers as predictable cash generators and view divi- dendsas a sign of strength. The corporate dividend survey, conducted by Penn, Schoen & Berland Associates, Inc., revealed that financial executives under- stand the appealof dividends—six out of seven finance executives (86 percent) said that they considered in light of the current low interest rate environment and the reduced tax rate on dividends, that these equities can provide a viable source of income for fixed-income investors. “Cash dividends also give investors the ability to reinvest their returns as they deem fit,” company’s projected long-term growth potential. based investment manager, Eaton Vance, believes stocks that pay bond returns, we believe dividends will play an increasingly important role in the way people think about their investments.” He noted that, ferred companies that offered buyearnings per share-over dividends. emerged from the doghouse.” So, why are investors turning to dividend-paying stocks now? For many, the reduction in the tax rate on dividends from a maxi- mum rate of 35 percent to 15 percent, which took effect in 2003, appears to have affected the decision to increase investmentin div- added Howard Silverblatt, pan- for Standard & Poor’s Index Ser- earlier in the decade. Silverblatt says the reason investors are turning back to dividendsis partly defensive. “They’ve learned that it’s not about making money in the bull market years; it’s about keeping it when the market goes down.” Eaton Vance Corp. is a Boston- based investment management firm whose stock trades on the New York Stock Exchange under the symbol EV. Eaton Vance and that the reduction in the maxi- its affiliates managed over $118.5 billion in assets as of June 30, 2006, for more than 100 investment companies, as well as individual and institutional accounts, sider investing in dividend-paying stocks. Investors have also begun hospitals, retirement plans, universities, foundations and trusts. idend payers. According to the study, 55 percent of investors said mum tax rate swayed them to conputting these views into practice. Nearly half of the investors polled (46 percent) said that they have increased their investments in including those of corporations, Before investing in any Eaton Vance Fund, prospective investors should consider carefully dividend-paying companies. At a recent panel discussion the Fund’s investment objectives, risks, and charges and expenses. The Fund’s current prospectus on the results of its two surveys, Duncan W. Richardson, said, “As we face an environment of lower equity returns and perhaps lower able through your financial advisor. Read the prospectus carefully before you invest or send money. hosted by Eaton Vancethat focused contains this and other information about the Fund and is avail-

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