The Financial Post reports in its Saturday edition that an analysis from Desjardins Capital Markets looking at 20 years of stock performance in Canada and the United States showed that companies with dividends usually outperform broader indexes. The Post's Jonathan Ratner writes that analyst Maher Yaghi also found that companies that decide to pay dividends see higher trading multiples and lower volatility. "We were not surprised by the results given that some pension funds have restrictions on how much of their portfolios they can invest in non-dividend-paying stocks," Mr. Yaghi said. While paying a dividend certainly attracts new investors, it also raises the risk that a company will be viewed as having lower growth prospects. If that's the case, income investors would simply replace growth investors, and the positive impact would be neutralized. Paying a dividend also helps, as the policy change signals "an improved sense of dependability and lower general perceived riskiness by investors," the analyst said. Average volatility dipped 6 per cent and 15 per cent in the year that followed a dividend announcement for U.S. and Canadian stocks, respectively, and 20 per cent and 19 per cent over three years.