Morgan Stanley says these 'dividend hopefuls' could generate big returns if they initiate a payout

There are a number of companies that have the financial ability to start paying dividends to shareholders, according to Morgan Stanley. Those that do so have the potential to then generate outsized returns for investors, strategist Todd Castagno said in a recent note. The firm found that companies that initiate a regular, quarterly dividend outperformed the market by an average 650 basis points in the six months post announcement, and by an average 920 basis points 12 months afterwards. Dividends can also help stabilize portfolios during times of uncertainty and high valuations, Castagno wrote. "During times of higher risk and valuations, dividends play a greater role in investors' total returns, helping reduce volatility and offering some support for stock prices," he said. "When growth s