Busted Dividend Myths

"It ain't what we don't know that gets us in trouble. It's what we do know that just ain't so." - Mark Twain Who needs Warren Buffett to drop some sage investment knowledge on us when we've got Mark Twain at our disposal? Truth is, many of us make investment decisions based on faulty premises all the time. And we pay the price, too. So, in honor of Myth-Busting Monday, I'm tackling three pesky myths about dividend investing with a little help from some charts.

Dividend Myth: Dividend Stocks Tank When Interest Rates Rise - Since 1972, dividend payers outpaced non-dividend payers by almost half a percentage point per year when interest rates were increasing. So much for higher rates eroding the attractiveness of dividend stocks. What's more, during periods of stable interest rates, like we're experiencing now, dividend stocks tend to trounce their non-dividend-paying counterparts. They rise an average of 12.3% per year - versus 6.2% for non-dividend payers - according to Ned Davis Research. In other words, right now is the perfect time to invest in dividend stocks. So what are you waiting for?

Source: Seeking Alpha

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