S&P white paper notes dividends are not only a critical component of total return, but dividends serve as a cushion in down markets. The compounding of dividends adds significantly to the total return of ones investment.

Not too surprisingly, mutual fund investors tend to ramp up their purchases at the top of the stock market cycle. This post shows the one year forward return along with the current period mutual fund flows.

The post will touch on an additional management evaluation tool: evaluating management using the shareholder letter. These are extraordinary investment times and many an investor are unsure of what to do next. Many factors will go into that ultimate decision, but I believe Warren Buffett said it best a few weeks ago:

The passage of the bailout package would likely not spark a surge in stock prices. In fact, it is less the equity markets that are causing the symptoms rippling through the economy and more the credit markets.

The dollar amount of dividend cuts in the third quarter of 2008 total $22.5 billion. These cuts come from 138 of the approximately 7,000 companies that report dividend information to S&P. Two-thirds of the cuts came from the financial sector.

Although the commentary surrounding the markets/economy can't get any more negative, there are some positive economic data points: Inventory:sales ratio, philly BOS. W. Buffett's saying: "I will tell you how to become rich. … Be fearful when others are greedy. Be greedy when others are fearful."

This article addresses factors an investor should consider as a result of declining oil prices and a strengthening dollar. One could serve as a headwind while the other could serve as a tailwind for multinational company earnings.

An important aspect of dividend growth investments is the ability for these types of stocks to provide a growing income stream that keeps pace with inflation. Additionally, dividend paying stocks tend to be less volatile in down markets. This can be an added benefit if one is relying on their investment portfolio for retirement income.

A look at some recent research suggesting dividend paying stocks underperform the market. I counter this with a review of research that covers longer time periods.

An article that discusses stock performance in periods of high and low inflation environments. Future stock performance is impacted by inflation expectations and not past inflation.

Undervalued stocks tend to outperform article. A recent study tested whether the top companies in Fortune magazine's list of America's Most Admired Companies underperformed the companies that ranked in the bottom of the list.

Now that the markets are in bear market territory several questions come to mind.
1. How long will the bear market last?
2. Should one invest in stocks now?
Also, a table on length of last nine bear markets.

Relating a company's fundamental factors to the dividend discount model.

In mid year 2007 the yield curve was predicting a 35% probability of a recession 12 months later. Today's yield curve might be predicting stronger economic growth one year in the future according to a Federal Reserve report.

A significant benefit of focusing on a company's dividend practices is the fact dividends must be paid out of cash. In a recent dividend investing white paper from Eaton Vance, the company notes dividends have accounted for over 50% of a stock's return since the 1930s.