Markets Are Rewarding Companies That Pay Dividends

Slow economic growth. Whipsawing volatility. In an environment like this, it is little wonder investors are piling into stocks with steady dividend payments. Mutual funds specializing in dividend stocks have seen inflows of $12.6 billion so far this year, four times as much as in all of 2010—even as stock funds as a whole have posted outflows of nearly $25 billion, according to fund tracker Lipper.

The best way to view dividends, say money managers, isn't as an end in themselves but rather as a means to other goals such as reducing volatility or boosting (but not turbocharging) income. Used smartly, dividend stocks can even generate returns that match the overall market—with beefier income streams. But investors shouldn't live on the div alone.

Source: Wall Street Journal

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