This episode of Planning Made Simple discusses the history and importance of dividends in the S&P 500, highlighting a shift in the market over time. Before the 1980s, dividends made up a significant portion (over 60%) of returns, but the rise of growth companies like Amazon and Tesla led many investors to focus more on stock price growth. However, dividends still account for around 40% of returns today, and there is a growing trend of large tech companies, like Meta, beginning to pay dividends. Dividend-paying stocks are often more resilient during market downturns and can provide reliable returns over time. Paul and Kyle emphasize that buying individual dividend stocks from the S&P 500 can outperform index funds due to the compounding effect of reinvested dividends.

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