In this episode of Rule Breaker Investing, David Gardner chats with Motley Fool analysts Buck Hartzell and Robert Brokamp about dividend investing. Discover how dividends have behaved historically and their importance. Which one is better for shareholders: dividends or share buybacks? What should you look out for? Learn about Dividend Aristocrats and why companies stop being Dividend Aristocrats. Finally, they have four dividend stocks and four ETFs for your watch list and much more.

Also, get a sneak peek at what's coming next week on Rule Breaker Investing.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on April 14, 2020.

David Gardner: Three months ago, which now seems like an eternity, I had Buck Hartzell join me for our January mailbag, and I surmised aloud that maybe, maybe we hadn't done enough on dividend investing on the Rule Breaker Investing podcast. I say "maybe" because it was very much up in the air in my own mind at the time about whether dividends have any real place in Rule Breaker Investing. Period.

Now, I pick dividend stocks, mostly for Stock Advisor, sometimes for Rule Breakers, and I think you know what dividends are: cash payments that companies make to shareholders as a reward for owning the stock. But for companies exhibiting dynamic growth of the kind we favor, rarely would such companies want to just pay out their cash to shareholders when they could use it as fuel for their own rocket, right? Right?

So we asked you on a Twitter poll on Jan. 30: Should David invite Buck Hartzell back on for a Rule Breaker Investing podcast this spring to discuss dividend investing? And the response was undeniable. 77.3% of you said "yes," only 12.5% said "no," 10% of you said polls were your pet peeve. And so Buck realized that you love him, you really love him, or at least the idea of dedicating a single full episode of this podcast to dividend investing you might love.

And so here we are. This week only on Rule Breaker Investing.

Welcome back to Rule Breaker Investing. I'm David Gardner. Thank you so much for joining with me, and with Buck and our special guest, whom we have not yet revealed this week. But three of us are here, all episode long, to talk with you about dividend investing.

Now, these stocks are very different from the five that I picked one week ago. That's right, I picked last week on this podcast five stocks for the coronavirus. How could I not? So please, if you didn't enjoy that, go back and listen and take five free stock picks, stocks that were picked with an awareness of what's happening in the world today and where the world might be headed. So we'll hope that that Five-Stock Sampler performs well for all of us in the years to come.

And speaking of Five-Stock Samplers and their performance, that's where we're headed next week. So next week I'll be reviewing three past April stock samplers. That's right, one from three years ago, one from two years ago, and one from last year. So it will be a review-a-palooza on next week's Rule Breaker Investing.

But that was last week and that is next week, but we're living in the here and now, in ways you and I might never have really thought much about before, but that's where we are this week. And how could I not be delighted now to introduce Buck Hartzell, to reintroduce Buck to the Rule Breaker Investing podcast. Buck, how are you doing?

Buck Hartzell: I'm doing very well, David. Thank you for having me back. It's kind of surreal when you look back at the last time I was on, and people wanted us back to talk about dividends and all that's happened in the world, and certainly in our country here. And thoughts go out to all those people who have been impacted by the virus, but it's great to be here and talking about dividend stocks.

Gardner: And I'm delighted. Where are you tapping in from this particular week? All of us are doing this remotely, I think my listeners know this, but our sound may be better, probably worse than normal. And, Buck, where are you calling from?

Hartzell: I am tapping in from my home office in Alexandria, Virginia. So just a couple of miles away from Fool HQ, but certainly not the fancy setup that we have at Fool HQ.

Gardner: Excellent. Now, you mentioned how some things in the world have changed. Some dividends have been slashed, I've noticed that, I'm sure we'll talk a little bit more about that. But then again, Buck, some dividends have continued to be paid. So there is some constancy when we think about dividend investing.

Hartzell: Yes, this is interesting. We're going to come out with some stocks, certainly at the end, we're going to talk about some companies that I like with dividends. And a few weeks ago, I started looking at some, but things were changing so much day to day that I was like, forget about this, so I actually picked these stocks yesterday. [laughs] And so, things have been changing so much.

But I think one of the things -- and our special guest may talk a little bit about this as well -- is dividend payments are less volatile than stock prices. And that's one of the nice things about having some dividend payers in your portfolio. And certainly, some have cut their dividends or slashed their dividends entirely, but a lot of them are still making those payments today.

Gardner: And that's a really good point. Well, Buck, I feel like we're talking about our special guest, we should probably now reveal who our special guest is. Buck, I'm going to give you the honors, since you have hand-picked this Fool celebrity for this week.

Hartzell: That's right. And he has the displeasure of sitting next to me whenever we were at Fool HQ. And so the easiest person to tap is somebody I've been friends with a long time, but it's our retirement expert here at The Motley Fool, Robert Brokamp, who also happens to be a certified financial planner. I think he's also a certified financial counselor, he's also, kind of, a history expert too on the side, so if you want to know about history, Robert is the person to talk to there, and a good friend of mine certainly at The Fool. And knows probably more, has worked on our dividend services and the product that we have there.

So Robert, what else did I miss?

Robert Brokamp: Hello, everybody, it's great to be on the show. [laughs] I guess, some people are familiar with me from the Motley Fool Answers podcast; that's probably the only other thing I would mention. And I run the RYR service, Rule Your Retirement, and co-advisor for The Fool's Total Income service, which does talk a little bit about how you turn a portfolio into a paycheck.

Gardner: Robert, it is great to have you this week. You are, of course, a many time guest on this podcast and a delight to have you back for a non-mailbag reason this particular time. Buck, before we get started, I want to make sure you've introduced yourself.

Now, some of us will certainly remember your first appearance a couple months ago, and the poll that spawned this podcast, but can you just remind our listeners what you do at The Fool?

Hartzell: Yeah, I'm Buck Hartzell, and I'm an analyst here. So you can find picks of mine throughout, certainly, some of the services here in the U.S. and products, but I also work on our Canadian services. And for those of you who are familiar with that market know that Canadians have a fondness for dividends, stronger than us Americans. And so quite a bit of the picks in our Canadian services end up being dividend payers out there, because they really value those, probably more than the U.S. And their companies, a lot of their smaller companies even pay dividends, where it's not so common around here.

Gardner: All right. And I guess I'm just going to put one ground rule in place before we start, and that is, I am inviting Buck and Bro to take over this podcast. So this is something I don't think I've ever done before, but it's a delight for me, two people I've worked with for more than 20 years. I'm definitely going to be here; in fact, I think I'll play the role of Everyman, scratch my head at a couple of the things that my experts are saying, and wonder what it's like for you at home, if you're new to dividend investing or if you have questions.

And we have at least one listener question that we received in the week in advance of this -- thank you, Nick Jackson -- that'll appear a little bit later in the show. So without further ado, Buck, I am handing the great big imaginary microphone in the sky to you.

Hartzell: Oh, thank you. This is great. And we had another question that we'll get to from the last podcast that we did that originally, kind of, spawned all this. And that was kind of about stocks that fall out of, or fail to be a Dividend Aristocrat, once they're already on the list. So we'll get to that at one point as well.

But first, Bro, since you joined us, and David used that instead of Robert. So I guess you're OK with that. So two things. First of all, can you define what a dividend is for folks out there that don't know what it is? And then maybe provide some context, historically, for how important are dividends to the overall returns that we see from stocks? At least some historical context.

Brokamp: Got it. So when you think about a company -- makes money, gets cash. And they have a few things they can do with that cash, lots of things actually. Four really biggies, I would say. First of all, you can reinvest in the business; No. 2, you could buy another company, just make an acquisition; No. 3, you can buy back your own shares; or No. 4, you can pay a dividend.

A dividend is just a check sent to shareholders. Although these days, it's actually just mostly automatically deposited into your brokerage account. It just magically shows up. How important are those cash payments to the historical returns of the stock market? Well, you've probably all heard that since the 20s, U.S. large-cap stocks have returned 10% a year. Dividends and dividend reinvestment actually account, historically, for 4% of that. So a large part of the returns. Although it does vary throughout time. So if you look at this last decade or the 1990s, dividends only accounted for about 17% of the return from stocks, but if you look at decades where stock prices didn't move very much, dividends were a bigger part, like, the 1970s, dividends accounted for 73% of stocks.

Gardner: So when you're saying that, Robert, I just wanted to be clear on that, you're saying, that 10% historical annualized return 4 of those percentage points?

Brokamp: Yes.

Gardner: Basically 40% of the stock market returns come in the form of dividends. But that's been as high as 70% in one decade and then as low as 17% recently.

Brokamp: Right, exactly. And if you look at an individual year level, the best year for dividends in terms of yield was actually back in the Depression, 1932, stocks yielded 13.8%. The lowest was in 2000, S&P 500 yielded just 1.1%. Where are we nowadays? Well, the S&P 500 is at 2.4%, up from 1.9% a year ago. So looks better now because prices are lower, but maybe not as high as some people would have expected.

And when you look at the history of stock dividends, it's important to know that if you go back as far as, like, the 1870s up to the 1950s, stocks always yielded more than bonds, because people felt like you needed to get that higher dividend yield to make stocks worthwhile, because stocks were riskier. In the 1950s, that switched to where bonds started yielding more than stocks.

And actually, at that point, many people thought, and Warren Buffett has talked about this, they thought, "Well, stocks must be overvalued, so I'm going to sell my stocks and wait until they yield more than bonds." If you did that, you had to wait till 2009, because it wasn't until March of 2009 when stocks, once again, yielded more than bonds. Right at the bottom, March 2000, the bottom of the Great Recession.

Gardner: So if you were still alive, you could have said, "Yes, now I will reenter the market."

Brokamp: [laughs] Yes, exactly. And of course, that was a good time to get back in the market. The stocks rebounded to where bonds once again yielded more than stocks, and that's been the case until recently. So once again, we're at a point where the 2.45% or whatever you're getting from your stock portfolio is higher than what you're getting from bonds. Right now, the 10-year Treasury is 0.8%, 30-year treasury is 1.4%.

Hartzell: Yeah. And something to think about there in context too, Robert, is that profits grow, over time, profits grow of corporations and that's why we're willing to take less for those. Usually it's about 6% or 7% a year if you look at the S&P 500, so people are willing to take less for those. When you buy a bond today, and let's say it's yielding 1.9% or 1.5%, the coupon, the interest that you receive on that bond is fixed. So you're not going to get -- there's no upside in that, there's not a huge upside in that bond that you're buying for 1.5% and 2%.

That's why a lot of folks that invest in bonds and fixed-income insurance companies and those kinds of things, they're in very-short-duration bonds, they're not buying the long-duration ones because they realize -- I'm not getting much. And Buffett even, a year or two or a couple of years ago, said that he thought there was a bubble in bonds. Like, who would buy this bond yielding 1.9%? We can get a corporation that's yielding more than that with its dividend and their profits are growing over time. It seems like an easy decision, and I think he's probably right, a lot of folks have less in bonds today -- you talk about this in retirement quite a bit -- than they do in maybe stocks.

Brokamp: Yeah. And they actually made a few studies that have broken up the market based on high yielders compared to stocks that are middled in the range of yielding or versus stocks that don't pay a dividend. And a lot of the studies actually have concluded that higher yielding stocks outperform, like, the market itself as well as no-yielder, so.

That actually was the whole subject of Jeremy Siegel's book, Jeremy Siegel being the Wharton business professor, author of the classic Stocks for the Long Run.

Gardner: Friend of The Fool.

Brokamp: Friend of The Fool. Yeah. He published The Future for Investors in 2005 and found that higher-yielding stocks outperform. A more recent study comes from Ned Davis: From 1972 to 2019, dividend growers, dividend payers returned about 12.8%; nonpayers, 8.6%; and the nonpayers were more volatile.

Now, obviously, many of the best investments in Motley Fool history have never paid a dividend. Berkshire Hathaway doesn't pay a dividend, and it's made Warren Buffett one of the wealthiest men in the world. So you don't have to have a dividend, but historically, dividends are a pretty good indicator, or at least can be a good basis for strategy, especially if you're someone who is looking for income, and as Buck said, you don't want to settle for the fixed income of a low-paying bond.

So that's a bunch of history, but really some things have changed considerably over the last four decades, and there's been a shift in companies from paying dividends to buying back their own shares. And so now I'm going to pass the virtual microphone on to Buck to talk a little bit more about the rise in buybacks.

Gardner: All right. So sounds like that's the end of Chapter 1, guys. We've talked about what dividends are and then Bro has spoken about the historical importance of dividends. On the Buck and Bro show here this week, we're going to pass the ball now back to our host, Buck.

Buck, what is Chapter 2 entitled? And maybe give us a sneak peek of the chapters that are ahead.

Hartzell: Chapter 2 is a slight detour from our dividend agenda, but it's important, and really, it's called "The Rise Of Stock Buybacks." So we're going to give people a little history of how long have people been buying back stocks and what's the trend today? And so, it's The Rise Of Stock Buybacks.

Then, our third chapter will be on the Dividend Aristocrats. That was originally the question that we were asked on the original podcast that we did.

And then our fourth chapter, we'll be talking about some dividend stocks that I like out there that were picked kind of fresh off the wagon, these were just from yesterday, so those would be some good dividend stocks.

And then our fifth chapter will be Robert piping back in again and giving us some other investments for those of you who don't want specific stocks but want to get some yield that might benefit you. So it'll cover yield investments, let's say.

Gardner: Wonderful! Okay, good. So Chapter 2, "The Rise Of Stock Buybacks."

Hartzell: Yeah. So this is important. And to give you some, kind of, quick judge on this. How much people are spending on buybacks versus dividends over time, we got to go back to the 1930s. And if you, kind of, remember, coming out of the Great Depression -- we weren't there, but we've read about it -- stocks were relatively cheap. As a matter of fact, they were super cheap. And companies decided, "Hey, we want to buy back some of our shares, because they're so cheap right now." And the people that ran their businesses realized that. But the government stepped in and said no, no, no, let's wait a second here. This is, kind of, manipulation, and it's unfair. So they actually banned stock buybacks in the 1930s.

So we didn't see much action going on until really the 1970s, when a guy came along called Henry Singleton. He ran Teledyne Corporation, which is one of the great stocks of that period and of history. And he was a math guy, and he realized that he could, kind of, buy back stock when it was cheap, and he did it in a huge way. He ended up buying back 90% of the shares of Teledyne and created a ton of wealth for himself and his shareholders in the 1970s.

But stock buybacks still weren't the rage. This was kind of one lone guy out there buying back some stock. It wasn't until the late 1980s and 1990s, that really was the kind of birth of the technology companies that we know today. And one of the things that came along with them was the widespread issuance of stock options, because a lot of these early-stage technology companies didn't have a ton of cash to pay to people. So they used equity, they used stock options for them. This was a great way for those companies to create wealth.

And when they did well and they started generating cash, one of the things that they did when they were holding a lot of these options is, let's buy back some stocks. So this really started in earnest in the 1980s and the 1990s.

One great thing about that was they didn't have to expense those stock options. So those companies didn't have to put them down as an expense. And lots of people, including Warren Buffett, said, if these stock options aren't a compensation expense, what exactly are they? [laughs] Well, exactly. The SEC caught up to this after a while. And by the time 2004 came along, they said you're going to have to expense those options.

And then companies decided to issue restricted stock. So it's a different form. So a stock option, you have to pay for it and it has a strike price. So if you issue it with a strike price of $10 and the stock is worth $9.99, that option is essentially worthless if it's on the expiration date. Whereas restricted stock, if you give that to somebody and you say, "Hey, I'm going to give you $1,000 of this stock and it's now at $6, if it goes to $3, you still have $500 worth of stock. It's a value regardless of what the price is, and you don't have to pay the company a whole bunch of money when you exercise it. It's automatically worth whatever it is, whatever the price of the stock is."

So issuing restricted stocks became a bigger thing in 2004. That's when buybacks really, really started to kick in. And we saw this, and it's been going ever since 2004. We've seen companies spend more and more on buybacks.

I have a pet peeve that I'm going to talk about -- when companies mention buybacks and dividends in the same voice -- in a few moments. But what I do want to say is, in that time period, from 2004 to today, companies have not been particularly good at buying back stock. There's not many Henry Singletons of Teledyne out there. They just aren't very good at it.

We saw this happen in 2008, where buybacks peaked. And what happened in 2009 when stocks were very cheap and they were holding a lot of cash, companies cut way back on their buybacks. Not only did they cut back on buybacks, they issued a lot more stocks to their constituents and their employees. So they tend to time their buybacks at the worst possible time. So they don't create a ton of value with those.

In 2018, just to give you some context for buybacks versus dividends, companies bought back $806 billion worth of stock in the S&P 500, and they spent about $460 billion in dividends. So that's about half. So double the amount of dividends is what they spent on buybacks, and that was in 2018.

Gardner: That's remarkable, Buck. And let me just ask you about that, because I know that often, we at The Fool -- and we have a lot of investment analysts, and you're getting to hear from a very good one right now, my fellow Rule Breakers listeners -- but we have a lot of analysts who look at it and often say, they're not making good decisions, like, they're not really stock pickers. You'd think that they would know their own company, but they often make the noob mistakes that we try to tell people to avoid through our podcasts.

But there's a whole second bunch of critics these days, and I'm sure you're familiar with this as well, I'm just curious if you or Robert has an opinion on this, people who say that's a real waste of money, it's not creating any real value, it's not creating new jobs in the world. It's almost viewed as unconscious capitalism, a bad or negative form of capital allocation. Do you sympathize with that, or do you disagree with that; either of you?

Hartzell: I disagree with that, and I'll tell you why. There's only a limit to what companies can reinvest in their business. I, as a shareholder, would love for a company to reinvest our money back in the business, create more jobs, as long as I earn a suitable return on that investment.

But there are some companies, particularly if we look at the top companies listed in the S&P 500 right now; I'm talking about Amazon and Apple and pick your light model company, they don't always have a ton of reinvestment needs. Now, Amazon does. They're building warehouses all over the country and that kind of stuff. Apple not so much. I mean, when you're generating $50 billion to $60 billion in free cash flow a year. I mean, there's only so many cool headquarters that you can build that are over budget and all rounded, but I would love for them to reinvest that.

But then, these companies that are so successful have to look, what can we do beyond that? Because you start to earn less and less returns on those investments. So I'm not against them buying back stock. I am against them when they do it nonstrategically, and that's what most of the companies that we follow and look at do.

They just say, "Hey, we're going to buy back these to offset dilution." And "Hey, shareholder, you should be very happy that we're doing that for you." I don't really feel happy about it. It's more of a transfer of wealth to the insiders of the company. I don't feel great about it, particularly, if you buy back shares at any price.

Gardner: Robert, do you have sort of the same feelings?

Brokamp: Yeah. I mean, theoretically I'm not opposed to buying back shares, and you can understand why it would benefit all shareholders, because you're reducing share count and earnings are spread over fewer shares. But the history of it shows that the majority of people are buying back shares at the wrong time, buying back at high prices. And now when prices come down, like they are now, companies are not buying back shares. So it's almost the opposite: They're buying high and selling and unable to buy when they're low.

Hartzell: Yeah. And recently, I just read an article that they were making some guesses for the year ahead, 2020, and they expected that stock buybacks would halve. So they would be half what they were last year, which was close to that $800 [billion] mark.

2018 had some weird stuff where we had some tax relief and some money was expatriated back and some things that kind of give an artificial little bump there. But still, buybacks in 2019 were just below that $800 billion mark. It's going to be half that rate this year as companies decide to conserve cash. So once again, they've proven they're not very good at the timing of it. And I say that in addition to not buying back stock, they're going to be issuing plenty of stock, and probably more than they did last year.

Gardner: So Buck, I sense we're nearing the end of Chapter 2, "The Rise of Stock Buybacks." I know you mentioned you have a pet peeve here, maybe you can give the money takeaway line for our listeners at the end of each chapter. So Chapter 2 as well.

Hartzell: Yeah. So I do have a pet peeve to add, and I want to give some context on S&P 500 companies and how many pay a dividend. My pet peeve is, I really dislike it when I read and I pick up an annual report or a conference call or management says, "We've returned this amount of money to shareholders this year through both dividends and stock buybacks."

And that's a pet peeve of mine, because a stock buyback is not a return of capital to me, and often it doesn't benefit the shareholders. And we've kind of talked about how the timing is bad; it doesn't create a whole lot of value for them. Only one of those is a return of capital to me, and that's an actual dividend that I get. It is double taxed. So it's taxed at the corporate level, and I am almost taxed at an individual level if I hold it in a taxable account, but that's actually a return of capital to me, and I directly benefit from it. Often you don't benefit from buybacks.

Gardner: Okay. Well, we like pet peeves on this podcast, Buck. Once or twice a year, I'll dedicate an entire episode just to airing it out. So I'm glad that you shared that, and I'm sure you got the hackles of some of our longtime listeners up with that point. I had kind of been missing that linguistic legerdemain, but now I see through it, and I agree with you.

Hartzell: Yeah, thank you. I appreciate that. And one more point before we conclude the chapter. Beware; I start with a skeptical view when a company says, "We're buying back stock." So my kind of thing is, prove it to me, prove that you're good at and you create value over time. So I'm skeptical from the start, and I would encourage other folks to do that as well. There are some that are good at it and strategic, but they are the vast minority.

Gardner: All right. So I realized earlier I asked you, Buck, could you give us, kind of, the money takeaway line for Chapter 2. And I know you have it and you're going to do that, but I skipped it for Chapter 1, talking about "The Historical Importance of Dividends." So maybe, Robert, if you would, sir, could you provide my listeners the kind of money takeaway line for Chapter 1, "The Historical Importance of Dividends"? And then, Buck, for Chapter 2.

Brokamp: So I'll just say, I'm going to close here the money takeaways with some actual money attached to it. Some actual numbers from Morningstar. And the bottom line is, you shouldn't ignore the power of dividends. So if you invested $10,000 in the S&P 500 in 1970 but didn't reinvest the dividends, you just spent them, that $10,000 would have grown to $350,000. If instead you reinvested those dividends; $10,000 grew into $1.6 million. Bottom-line again, don't ignore dividends.

Hartzell: So the conclusion of Chapter 2, "The Rise of Stock Buybacks," is that companies are favoring buybacks, they're growing at a quicker rate than dividends, and they currently spend about 2X as much on buybacks as they do on dividends. Unfortunately, they haven't proven to be very good at those. So you can use stock buybacks as a contraindicator. If you see the buybacks are really high, like they have been in 2018-2019, be a little patient, because once they drop off, that usually is a good sign that you should come in as an individual investor and buy.

Gardner: All right. Now, normally, I'd probably read an ad at this point, but we found that advertisers aren't as interested during coronavirus. And so I think in some ways, listeners who may not love ad reads will be even happier to know that we're just going to go right on from here to Chapter 3. Now, if my math is right and my memory is right. I think, gentlemen, Chapter 3 is entitled "Dividend Aristocrats."

Brokamp: It is. Absolutely. So welcome, everybody, to Chapter 3. I'm going to start by saying a little bit about the Total Income service here at The Fool that I mentioned. Every stock we recommend in Total Income is a dividend payer for a couple reasons that we've talked about.

First of all, dividends historically grow at 6% a year. So they beat inflation, it's inflation-beating income. And they're more reliable. So looking back to 1958, there've only been eight years when the S&P 500 as a whole cut their dividends. And in six of those years, it was, like, 1% or 2%, not very much; and only two years was it significant. 1959, dividends were cut 12%, 2009, dividends were cut 22%.

Honestly, I think this year will probably be another year where we see significant declines, but still, when you think of like a retiree, for example, who wants to live off their portfolio and has a retirement of 20 to 30 years, you can feel pretty confident that you're going to get a good inflation-beating stream of income from a group of stocks.

Gardner: Isn't that amazing to think, Robert, that only a few times over the course of a human lifetime have dividends actually been slashed across the S&P 500? That is remarkable. When people talk so much about the stock market as a great big gambling machine or all the volatility and market crashes and rises in greed and fear. And yet this year, it does sound like this will be the third year in, kind of, a human lifetime where dividends do go down, but wow! what constancy.

Brokamp: Right. And I think that's what makes them so attractive. And when you see the studies that find the dividend payers outperformed nonpayers, part of it is the characteristics of a company that pays a dividend, because they're significantly cash flow positive, and they have committed to paying out that income every quarter.

So of course, you can find some of these companies yourself. But if you're looking for a group of them all set up for you, check out the S&P Dividend Aristocrats. So it's an index that was formed in 2005. All the companies come from the S&P 500, but then they take the companies that have grown their dividends for 25 straight years.

So these are companies that have a long history of growing their dividends. It's an equally weighted index, so, unlike the S&P 500, which is market cap weighted -- so, the biggest companies have the biggest weighting -- this is equally weighted, quarterly rebalanced, and they update the companies once a year.

And if you look at the performance of it, when the index came out in 2005, for the next several years, more than a decade, it outperformed the S&P 500. It's actually just in the last three years that it has started to lag, because over the last three years, the best performing sector has been tech stocks, and there are very few tech stocks in the Dividend Aristocrats. Only, like, 1.6% of the index are technology stocks.

It currently holds 64 companies, but almost half of them have actually been growing their dividends for more than 50 years, so these are long-standing, cash-generating companies. That said, the yield itself is not that high. So it's currently about 2.7%, so not that much higher than the S&P 500. You are really looking at companies that you can rely on to pay a growing dividend.

And just to look at some of the top holdings that are currently in it. And again, it's equally weighted and regularly rebalanced, so a top holding doesn't stay at the top for long. But just currently, some of the top holdings are Clorox, Walmart, Kimberly Clark, Colgate, Johnson & Johnson, and Procter & Gamble, those types of companies.

Now, every year, it does reconstitute, and some companies do get dropped. And I'm now going to turn the microphone over to Buck, within the chapter, to talk a little bit about some of the companies that have been kicked out of the Dividend Aristocrats. We can call them fallen aristocrats maybe.

Hartzell: [laughs] Fallen aristocrats, that's exactly right. And I think the original question that we got on the podcast, David, was somebody asking about what happens to a company and why do they drop out of the Dividend Aristocrats? And, you know, I think at that time, I talked about GE, which was a company that's very old, the original DOW company, and paid a dividend for a long time and then ran into difficulties in 2008 and 2009.

But there's a lot of reasons why companies stop paying dividends that have paid one for a long time. And I'm going to go through one example, but we'll mention a few other companies that might be of interest, and then we'll pull out some common themes in that at the end.

So there was an article on Dividend.com, and they talked about the biggest dividend stock collapses of all time. And we are all familiar with these companies. They include General Motors, Kodak, AIG, Bank of America, Ford, Citigroup, British Petroleum, and JCPenney. I mean, I think we're all familiar with those names as being giants at a time that had just kind of fallen and are not very relevant for a big part today

GM, let's take a look at them. They were founded in 1908, probably one of, if not the world's most valuable, powerful company probably around the 1950s and 1960s. Huge market share of the auto market, which was growing nicely. And they paid regular dividends for a long time. And we get up to 1997 to 2005, they paid $0.50 a quarter. That's a pretty big dividend, you know, $2 over the year.

By the mid-2000s, this sported a 10% stock yield. And this is going to be the, kind of, big takeaway lesson here when we get to the end. They had a big yield, not because the company did really well and was gaining market share and selling more and more cars at higher and higher profits and raising their dividend. They had a high yield because the stock had underperformed and it actually continued to go down over a long period of time.

Gardner: And so, the stock, you're saying, Buck, had declined basically to $20 per share. And so, with $2 per share in dividend, that's 10%, and that's the dividend yield that we're talking about. The interest rate, in effect, that you get paid for holding the stock. And so, yeah, so that constancy of the $2 dividend per share matched against declining stock price that had dropped to $20. It's really unsustainable.

Hartzell: No, it is unsustainable. And you see a higher, we call -- when folks look at this -- I know Robert and people that look at picking dividend stocks, they look at something called the payout ratio, which is the proportion of their net income that they're paying out in their dividend, and sometimes you see some of these companies going over 100%. Well, that's a big warning flag. Or even for some of us in the high 80% or so.

Gardner: Let me jump in there, Buck, because I think the payout ratio is one of those takeaway phrases, especially for people who are regular Rule Breaker investors but don't spend a lot of time with dividends. I want to make sure everybody walks away understanding what the payout ratio is. Can you just, kind of, make up an example, maybe make up some numbers for GM, if you like, yeah?

Hartzell: Sure. So GM was paying $0.50 a quarter, so that's $2 a year in dividends. What was their net income or their earnings per share? You know, if their earnings per share was $2 too, then they were paying out 100% of their earnings in dividends. That doesn't leave a whole lot left over to reinvest in the business and buy new machinery and open new plants and hire new employees and do all those kinds of things. So certainly at 100% and above, it's a big red warning flag for some of us, and it depends on the industry that you're operating.

If you have guaranteed revenues, like a utility or maybe even railroads and stuff, they can pay out a higher proportion of their earnings than other companies can. But if you have some variability in those earnings, like a car company, where you have a bad economy, you don't want to be paying out 90% or 100% or even 80% of your profits as a regular quarterly dividend when the economy tanks. So that's a bad thing.

So payout ratio is moderately around 50% to 60% is reasonable as well --

Gardner: ... OK, that's what I was wondering. Okay. Good.

Hartzell: Yeah. When you get up into the 80%, 90%, and 100%, you know, there are some things that'll happen from year to year where a company will have a bad year and they may spike their payout ratio a little bit, but then it comes right back down again, that's not a big thing. But when you see a continued decline in the economics of the business like we saw in GM, and all of a sudden people were looking just at one thing to say, "Wow! GM, I know them and I like Corvettes, and they pay a 10% dividend, I want some of that."

Well, you better be careful, because there could be some other stuff that's very negative about that company, and often there is, whether its pension liabilities or the company is not being run that right or they're losing market share. Be skeptical of a company with a super-high dividend payout ratio that's paying out a real high proportion of their earnings.

Gardner: All right. So, Robert, what more do you want to say about Dividend Aristocrats, or are we getting near the end of this chapter?

Brokamp: I think we're at the end of this chapter. So I'll just give us the money line here, and that is, if you are looking for income from your portfolio, you can go with bonds, you'll get stability, you'll get that fixed income, which means it doesn't grow. But you should complement it with stocks, a diversified portfolio of dividend payers. Because historically, you're going to have income that is surprisingly reliable and that keeps up and beats inflation.

Gardner: And before we move on to Chapter 4, I'm just thinking about constancy and resilience. And this is a total detour, only 60 seconds or so, but I was researching a stock this past week that I decided, ultimately, we won't be picking for Motley Fool Stock Advisor. It's a small company, but check out this record.

So the company is J&J Snack Foods. If you have ever had soft pretzels, you've probably tasted their wares. If you enjoy the Luigi's or ICEE frozen treats, that's from J&J Snack Foods. This is a company that was started by Gerald Shreiber, he bought it out of bankruptcy in 1971. Get this, they have raised their revenues every single year for the last 48 years, that's an incredible revenue aristocrat, a phrase that people don't rock as often, but all of my listeners and both of my analysts will readily understand the concept. Sadly, don't you think, they have virtually no chance of keeping that streak going. So 2020 is the year that's going to break many a streak.

And in a lot of cases, it comes down -- and we talk about this a lot -- about the resilience of company's balance sheets, who can thrive, who can survive and you will not survive. And a lot of it is, what you were doing with that capital, how you were allocating and storing it up, in some cases, for a bad winter, which we're seeing right now. Other companies, just not doing so or not able to do so.

So Dividend Aristocrats, Revenue Aristocrats, really the aristocrats of business, the ones that just keep getting it done, not just year after year but decade after- decade.

All right, Buck, I think we've gotten to Chapter 4. I'm sure you're rubbing your hands together a little bit, your proverbial hands, at least, because you have in mind some dividend stocks that you think our listeners should take a look at.

Hartzell: That's right. And I think this is a really good time to do so, David. Stock prices have fallen on average 25% to 30%, which gives us an opportunity to get into some of these stocks at really nice prices and it bumps up the yield. So we're going to get a return on the capital we invested higher than we would have just a couple of months ago. And I'm picking companies that I think are very strong and in a pretty good position to have good results.

So let's just start it off. The first company is one that most folks haven't probably heard of, it's called CNA Financial (NYSE:CNA). And when you type this into Word, it'll autocorrect to C-A-N, "can," and it's annoying, it happens every time, but it's CNA Financial. [laughs] The ticker is also CNA.

And today you're getting this stock in the $30s, so it's around $32, $33 a share, depending on the day. Here's the great thing, last year they paid out $3.40 in dividends. And they pay a regular quarterly dividend in addition to a $2 special dividend they just paid this March.

This is an insurance company. And insurance business, for those of you who follow along, it was a really good year for insurers. A couple of years ago, we had two back-to-back really bad years of catastrophes and that kind of stuff that really hit insurers. And this year has been very good, because they've been able to raise prices.

So some of those insurers who were writing bad business, pulled back on their business, others stepped in, and they raised prices and that happened, kind of, all year. I suspect that prices are going to go up next year as well, David. So it's a pretty good time to be an insurance company.

And here's the interesting thing about CNA. 90% of their stock is owned by a parent company Loews, although CNA is publicly traded on its own. They can't buy back their own stock, because one entity owns 90% of them, that's Loews, ticker is L. And so, buybacks are not an option for them, so they just basically pay out about $1 billion in capital every year, most of which, about 89%, goes directly to the parent Loews, which is the controlling entity.

So if you're interested in a company that pays a nice dividend. And they do something, kind of, cool, $2 of that is a special dividend, they've done that since 2017. If something happens and they have a bad year this year, they can always pull back that special dividend, say, "We're not going to do that this year," or "We're going to cut it down and make it a little bit less." But I think, better part of most years, you're going to see yields and dividends coming out of this company, they're going to be $3 and above.

Gardner: So thank you for that, Buck, and I'm glad you mentioned the concept of a special dividend. Now, not many companies do this. Of course, many companies don't pay any dividend at all, but of those that do, some do elect to pay special dividends. I can think of a star performer for me in Motley Fool Stock Advisor, which I recommended in July 2012, and that's TransDigm Group (NYSE:TDG), TDG. This is a company that regularly pays out, and I guess it's not as special if it's regular. But I mean, there's no schedule for it, but regularly TDG has paid out a pretty generous dividend. So this is a concept.

And I guess my question for my listeners, people who may be new to this -- are special dividends factored into yields historically or even in the present day, or are those just totally outside and not really recorded?

Brokamp: So the general rule is that special dividends are not included when you look up, like, a dividend yield on Fool.com or Yahoo! Finance or anything like that. But I have seen times where it has happened. So if you ever have a stock where the dividend yield jumps dramatically and the price hasn't fallen very much, it might be due to a special dividend.

Gardner: Okay. Well, anyway, so CNA, Buck, is one of the companies that does this. Again, it's a bonus. I was wondering, before we move to stock No. 2, is the insurance business that good or healthy? It feels like all business is getting hurt, and I'm wondering, are people going to be able to pay their premiums and all the rest, but you're feeling rock solid in terms of CNA's performance.

Hartzell: So I like CNA for a variety of reasons, and we don't have time to go full deep dive into them. They're trading at a discount to book value, and they're a company that regularly earns more than they pay out. So that's something we look at as a combined ratio in insurance companies. If it's less than 100%, that's good. They usually operate about 94%, 95%. They had a longtime CEO who retired, they hired a guy from Chubb, Dino Robusto, who's a great CEO. He's working on the expense side of the equation. So things have been going great there. And this company is a specialty insurer. So that's just the way I would think about it, is -- they mostly insure stuff that others don't. I mean, and so you can charge a little bit more for it and your ratios --

Gardner: Yeah, kind of like Markel.

Hartzell: Yes, exactly. And so --

Gardner: Although, any company would love to have a CEO named Dino Robusto, are you kidding me? Come on, now!

Hartzell: Right. Yes, I know. And he's doing very well so far. I mean, having a good business. And so I'd say, when you combine the things of this is a good business, combined ratio is below 100%, it's trading at a discount to book value, it's also growing book value, it's generating a lot of excess cash throughout the last several years, even during the bad times. It's a good business.

There's been some worry, and I think, legitimately about some of the political climate on how much are insurers going to have to assume? After the last, kind of, pandemic things that we saw, the flu-related years ago, all insurers exclude pandemic insurance.

So that's an extra rider, so you have to pay extra for that. Well, almost no one did, though we saw Wimbledon did. They're going to get a payout of $141 million because they paid an extra premium of $2 million a year for the last 17 years to ensure Wimbledon, and they're going to get a $141 million payout this way.

But there's been a lot of political pressure to say, "Hey, insurers, although people didn't pay you for this, you're going to have to pay out for business interruption insurance and all that kind of stuff, even though you excluded in your contracts pandemics." There's questions around that.

I don't take a line on it other than to say that, if it's put in there and insurers have to operate under the pretense that we're going to be responsible for stuff that we specifically excluded from contracts, then insurance rates are going to go through the roof, and nobody wants that, including the business operators and everybody else that's involved.

I think, when you have extreme events like this, this is a time where the federal government has to step in. This can't all be put on insurers. So I ultimately don't think it's going to go that way. But who knows where the political winds will blow? But this is a strong insurer with plenty of capital and well run.

Gardner: And I'm glad that you referenced past pandemics. I mean, the 2009 H1N1, the swine flu, didn't really reach that kind of scale, but it did give kind of a dry run of an understanding about how insurance would be treated, or there are some precedents in place and reason for confidence around CNA. Okay, what's stock No. 2?

Hartzell: Okay. So stock No. 2 is Brookfield Asset Management (NYSE:BAM). This is a Canadian company, one off our scorecard in Canada that we've loved for a long time. Their current dividend yield is about 1.4%, so that's less than the S&P 500. So you're like, "Buck, why do you bring me this minuscule 1.4%?"

Gardner: That's what I was about to say.

Hartzell: I know. I just gave you 10%, all right? So let's average these out, that's pretty good. But here's the thing that I like about this, and this is in opposition to Dividend Aristocrats who had paid a dividend for a long time. These guys are relatively new to the game. They are an excellent, well-run business, and they're a conglomerate. They have their hands in real estate, they have their hands in infrastructure projects. So bridges and tollbooths and railroads and data centers and cell phone towers. I mean, a whole bunch of things. We don't have time to describe everything that Brookfield does, but they have a lot of publicly traded businesses.

And here's what it comes down to. They anticipate that they're going to generate about $60 billion in free cash flow over the next 10 years. They are an asset manager with almost $300 billion of interest-earning assets, and they keep banking more and more of those that are going to be paid out as their investment funds mature.

These guys are an alternative asset manager, they're super well run. And over the next 10 years, that $60 billion has got to go somewhere, and management has said it's going to go to dividends or it's going to go to buybacks, and it depends on where the stock price is. If the stock is very low, we're going to buy back stock at attractive prices, and if the stock price is high, we're going to pay it out in dividends. And I trust these guys to actually do it well. [laughs]

So you get a 1.4% dividend, you get access to a really well-run company that I know is going to be much bigger 3 and 5 and 10 years from now, and you're going to benefit, you're getting in before all those dividends and all those buybacks happen. So if you've got 10 years, put some money in Brookfield Asset Management. Their ticker is BAM.

Gardner: And I particularly appreciate that point, Buck, because I think our discipline as Rule Breaker investors is to think about the future, what people can't see yet, and to invest where the puck is going to be. And so, I particularly like, [laughs] even though CNA has a dividend yield well in excess +8% of Brookfield Asset Management, I totally hear you in terms of where the growth is coming and how you could expect more and more dividend from a stock like this one, given that 10-year expectation.

Hartzell: Yeah, exactly. So that's Brookfield Asset Management. And now for those that want a little bit higher, I'm going to give you another Brookfield entity, OK? So that's Brookfield Infrastructure. There's a couple of reasons. This ticker is BIPC, for those of you in the United States. On March 31, they introduced a new share class.

Previously, we could only buy this, and it was a partnership unit, you had to file a K-1 for tax purposes, a little bit of a pain for people here in the U.S. And so they simplified things and introduced this new share class. So this is a great chance for investors here in the United States to get into this business. They currently have about a 5.4% dividend yield.

These guys own toll roads, other infrastructure assets, including railroads, cell phone towers, data centers, you name it. They own anything infrastructure that's big and hard to manage, they own it. Some of those businesses will be impacted. Their ports, they own a big port, that'll be impacted. Others are doing very well.

But overall, you have a 5.4% dividend yield, and that's going to grow at anywhere from 5% to 9% a year, which is well above the inflation hurdle that Robert talked about earlier. And like I said, it's a great-run business. You're getting about a 5.5% dividend yield, it's a good business. About 90% of their revenues are inflation protected or contracted, which means even during this downturn, they're going to be getting paid. So I think it's a great business, and it gives you a little bit of a higher yield than Brookfield Asset Management, the parent company, which owns about 30% of Brookfield Infrastructure.

Gardner: Okay. Three pretty compelling ideas, all companies paying dividends at really varying yields. You gave us a 10%, you gave us a 1%, and a 5%. So Buck, you gave us a nice mix there. Is that it, or do you have one bonus pick?

Hartzell: I have a bonus pick. And this one is, it's a really good well-run business, but it's going to be more impacted by the downturn that we're having here than the other three. And so I'm telling you this. This is one, I think, I would average into as an investor and a shareholder.

So this is Western Alliance Bank (NYSE:WAL), the ticker is WAL. It currently sports a 3% dividend. And here's why I like this business. They just announced their first dividend in the third quarter of 2019. So this is their very first dividend. At the time, this was a $50+ stock, it was about a 1% dividend, not that interesting, but because of the economic turmoil and all that kind of stuff, the stock price has come down. So we're getting what is a 3% dividend yield on a company that only paid out probably less than a 30% payout ratio. So less than 30% of their profits.

In other words, in a normal economic environment, which I think we will get back to -- I don't know how long it's going to take, David, but we're going to get back to a normal operating environment -- this company is going to pay out more and more of its profits. And if you buy it here at a 3% dividend, this is a stock that we could look at five years from now and go, "On my original investment, I'm now getting a 6% or 8% or 10% or 12% payout." So I think this dividend will grow over time.

And they're a bank, most of their business is in Arizona, Nevada, and California, but the cool thing about them is they have a bunch of these things they call national business lines. So they do loans all over the country. And they do them with very low loss rates. So an example is, they give loans -- and this is one that will be impacted -- they give loans to hotel operators that buy franchises.

So Marriott, which is a pick, a company you're well familiar with, it's done very well. They've gotten hurt in a big way during this downturn. If you're a franchisee for Marriott, you want to buy a hotel franchise, these guys will loan you. Their average loan is about $10 million on a hotel franchise, and they have them in most of the big metropolitan areas. They aren't out in the middle of nowhere. And that's something that they do.

They also handle HOA fees. So anybody that's listening that lives in a condominium that pays an HOA fee; these guys do administration on that. And what they've seen over time with these special national business lines -- it's what they call them -- people aren't so price sensitive, they just want stuff that works very well and is smooth and is convenient for them.

The HOA, they're not worried about earning a great return on that. So as a result, their cost, their deposit base is very low. So less than a 1%, about 0.86% is their cost of funds. And they lend out money at over 5%, so their net interest margin is about 4.4%. That crushes all the big banks. Citigroup, Bank of America, all those, they're half the rate.

So this company earns a higher return on equity, they generate a lot of excess capital, they've grown nicely. They're going to be impacted though, no doubt about it, by the virus, but it's one where I think the stock decline is overrun a little bit here.

So if we're looking to where the business is going or where the stock is going, buy some now, add a little bit two or three months from now, add a little bit more maybe three months from then, and you kind of average into a nice position in a company that I think is going to pay a growing dividend for 10 years and longer. WAL is the ticker for that one.

Gardner: All right. Very well explained. And HOA fees, homeowner's association fees, amounts of money paid monthly by owners of certain types of residential properties, and in this case people who live in the Southwest, where there are a lot of those properties. Buck, thank you very much for generously sharing four dividend investing ideas.

And that's going to wrap up Chapter 4. I mean, I think the money line is something like, "Hey, you Fools, you just got four free stock picks." But do you want to deliver anything else as your Chapter 4 money takeaway line here?

Hartzell: Yeah. So I would say for my takeaway line here, and you can look at these businesses, there's kind of -- CNA is a special situation, but a lot of these are early dividend payers. They don't have a 25-year history of raising dividends, but as a result, their payout ratios are lower. And all these businesses are growing. They're generating more and more profits each and every year.

This year will be an exception, because it's a down year, there's no doubt about it, but I think these companies are all on the upswing, they're going to generate more profits later on. And so we're kind of investing early on in the cycles of these businesses at what I think are good prices instead of looking for just this 25-year track record that we see from a Dividend Aristocrat.

Gardner: All right. And that takes us to our final chapter, Chapter 5. And while the focus of this week's Rule Breaker Investing podcast is nearly 100% on dividend investing stocks, Robert, you're going to make it not 100%, because it's a great big world out there. Other things pay dividends that aren't stocks.

Brokamp: Right. And I think for a lot of people who might be listening to this, love the idea of having a portfolio of dividend payers, but aren't so inclined to pick the individual stocks themselves, or they want to make sure they have a broad selection of dividend payers, some great options are some dividend-focused ETFs. And I'm going to give you four choices here.

When you look at dividend-focused ETFs, you basically have two types. They're the types that maybe not have particularly high yields today, they're focused on companies that are growing their dividends. And then there's the type that is focused on companies that have high yields today. So I'm going to give you two from each of those categories.

So first of all, let's say you just love the idea of the Dividend Aristocrats. Well, there's an ETF for that. It is the ProShares S&P 500 Dividend Aristocrats ETF, ticker is NOBL. Noble, without the E, NOBL. So quick way to get the Dividend Aristocrats, current yield 2.7%. Then there's the Vanguard Dividend Appreciation ETF, symbol is VIG. Has just a yield of 2.2%, not very high, but I like the way they've constructed the index. It follows the NASDAQ US Dividend Achievers Select Index, has more tech, 10% of it is in tech. The top holding is Microsoft. So it's a little bit more diversified in terms of sector.

When we move to the high yielders, there is The SPDR S&P Dividend ETF, the symbol is SDY, not S-P-Y. but S-D-Y. And that takes from the S&P High Yield Dividend Aristocrats Index, which is basically the S&P 1500 companies that have been paying dividends for 20 years or longer but have high yields, that currently is yielding 3.5%. And finally, the Vanguard High Dividend Yield ETF, ticker VYM. Follows the FTSE High Dividend Yield Index, has a current yield of 4.2%.

So they're all constructed differently, you could actually own all four to have a good portfolio of dividend payers. I own both of the Vanguard ETFs.

And the money takeaway here is, many times throughout this podcast, I've said a diversified portfolio of dividend payers has reliable inflation-beating income. You do have to have that diversification. And buying two or three of these dividend ETFs will provide that instant diversification.

Gardner: All right. Well, I want to thank both Buck and Robert, once again, for joining me on this special dividend investing episode of Rule Breaker Investing. We did solicit some questions ahead of time.

Nick Jackson wrote in. In some ways, Nick, if you've been listening, I hope you have attentively throughout this hour, you might now understand the answer to this. But maybe this serves as kind of a wrapper, guys, for thinking about investing. So Nick wrote in and said, "Hi, David and Buck, really glad you're doing this. It clearly is important to be diversified among growth, income, and some hybrid stocks, especially... " Nick writes, " ...these days. A dividend is often expressed as a percent yield, and I realize the yield changes based on stock price fluctuations." Well, that's exactly right. He goes on to say, Buck, "I often see, especially, in the last few weeks, headlines that will say something like, you should buy -- insert stock here -- as its dividend reaches 5% yield, let's say, something like that." So Nick says, "Why is that considered an especially good buying opportunity, because the actual dollar amount of the dividend hasn't actually changed?"

To use an example from earlier, if General Motors is just paying out $2 a share this year, why, Nick wonders aloud, does that matter what the yield is per se? He's still getting that $2-a-share dividend.

Hartzell: Yeah. Well, I think, Nick, what we're looking at here is -- you get an opportunity to add when the share price is low. Like, if you're buying when the share price is low, whether it pays a dividend or not, that's always a good thing, but I think the other point to this underscores is, you don't want to go out looking for dividend stocks.

As a matter of fact, I never really -- all the stocks that I mentioned, I never looked and said, I'm going to find a dividend stock. I was just out looking for good companies to understand them, they happen to pay dividends, and they make a good fit for this. But certainly, if I was looking for dividend stocks, I wouldn't just look at the dividend yield. We talked about General Motors as being one of those examples. A high yield is often something to be skeptical of.

Gardner: Red flag.

Hartzell: Yes. And I would be particularly -- be wary of companies that have a high dividend yield that when you look at them, without even looking at the financials and everything else, just go -- is this company a leader in their field? Do I think they're going to be more valuable 5 and 10 years from now? Are they hitting the ball out of the park? If they're not, and this is a company that you think is declining in relevance and importance in our society and they happen to have a high dividend, I exclude it right away, right?

So just looking at dividend yield alone is not enough; you have to know where it's coming from and how good the business is and how well they're operated and how good the leadership and all those other things that we like to look, brands and quality and that kind of thing.

Gardner: And maybe that's a money takeaway line for the entire episode. I love, Buck, that you found these companies not by hunting or screening for yield, but you just love the market, you love researching business, and you happen to find great companies that are paying dividends, and you highlighted some attractive ones for us, a nice range of them. I want to thank you; I want to thank Robert.

Robert, I really appreciate your funds, the ETFs providing dividends, providing income at the rate of around 2.5%, depending on what we're talking about, for people who need that at this stage of their lives. So it was a wonderful time with two of my best friends here at The Motley Fool to share with you their thinking, both historically and very much in the here-and-now about dividend investing.

Now, if you do find yourself interested by the topic or if we aroused a new question, well, two weeks from today, we'll be doing, of course, our April mailbag. So the email address is RBI@Fool.com or, of course, you can tweet us @RBIPodcast on Twitter. If you have questions, follow-ups, thoughts about dividends, this seems like a good month to do it, because we featured an entire episode of our show solely on dividends.

So for now, anyway, the Buck and Bro show must end. But thank you, again, Buck and Robert.

Brokamp: It's been great to be here.

Hartzell: Thank you for having us. Find some great stocks out there. Whether it be dividends or not, I'm glad you're curious. And if you're listening at this time of day when things are going on in the world, you're going to do very well.

Gardner: Thank you very much, Buck. And, yeah, I hasten to add, as Buck goes out the door, I'll mention, he's not even a self-fashioned dividend expert, I just kind of know Buck knows a lot about investing. So as I thought about putting this show together, I thought, I want Buck to put that together. But, well, you're not quite out the door, Buck. You'd be the first to say that this is not your full-time focus, dividend investing?

Hartzell: No, I've never worked on any of our dividend services, and like I said, I don't look specifically for dividend stocks, but I don't look for anything specific, really, when I go out and do research. We're just looking for great companies led by people that are honest and capable. And from there on, some of them pay dividends, and that's fine with us. We didn't mention at all today, MercadoLibre is a great up-and-coming disruptive growth story of a company that's paid a modest small dividend for quite a bit of time. So even in your area of growth companies, we find some of these pay a modest dividend. And to me, that's usually a positive sign for some of those businesses. There's some discipline that comes along with paying that modest dividend and all that goes along with it.

Gardner: All right. Well, next week, it's going to be a review-a-palooza episode. So that's right, three years ago I picked 5 Stocks for April the Giraffe. I will reexplain who April is and why I was picking stocks for a giraffe next week. How have those stocks done? Two years ago, I picked 5 Stocks I Own That You Should Too, and then last year I picked 5 Stocks for the Age of Miracles.

We'll be reviewing all 15 of those stock picks and what we can learn together. I hope the market continues to rise in-between this week and next week -- that will make my numbers look better -- but of course, mainly I'm hoping the stock market rises for you and me all the time.

So thank you very much for suffering Fools gladly once again this week, stay safe out there, wash your darn hands, and Fool on!