He adds that now couldn't be a better time to following the strategy, with the Federal Reserveannouncing that interest rates are likely to remain near record lows for the next several years.
“(Fed Chairman Ben) Bernanke is definitely forcing people out of the risk curve,” said Cohen. “He's trying his best to re-flate the economy.”
Cohen highlights the Fed's actions, because if they boost economic growth, it follows that companies' stock prices, and their ability to pay dividends, also get a lift.
Clearbridge's top five equity holdings include Exxon Mobil, Procter & Gamble, Waste Management, Microsoft , and Kimberly-Clark.
“If you're thinking about the next three months? Who knows. But if you're thinking about the next five, 10, 20 years, I can tell you from experience that stocks actually work and dividends actually work,” Cohen said.
Over the long term, high-quality stocks reap the benefits of compounding — generating earnings from re-invested, previous earnings.
“There are so many great companies that do all the right things for shareholders,” he said. “It's not a new idea, but I think people would benefit from focussing on it.”
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Hersch Cohen owns stock in Exxon Mobil, Procter & Gamble, Waste Management, Microsoft, and Kimberly-Clark, through Clearbridge Advisors' managed account, called the “dividend strategy” portfollio.