Dividend Stocks Are A Good Place to Park Funds

Looking for earnings in all the wrong places -- like CDs, annuities and cash -- we would be wise to consider the dividend yields taking place right under our noses. Our record $9 trillion sitting in cash earning nothing right now might be better put to use in any number of companies paying out a strong dividend yield. We tend to forget that dividends, reinvested over time, represent one quarter of the compounding gains we can expect from a typical mix of stock investments.

Dividends are currently taxed at only 15 percent at the federal level. Better yet, in a retirement plan, the tax on them is deferred until a retiree starts nibbling away at the account to support an eccentric personal retirement lifestyle. In some cases, dividends alone might be enough to meet the "minimum distribution requirement" (3-4 percent) -- the amount that must be spent from retirement plans starting at age 70 and a half.

Source: The Oakland Tribune

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