Dividend Stocks Aren't Doomed

BRIC countries. Social media IPOs. And now dividend stocks? Two weeks ago, at the 15th Annual Investment U Conference, I was asked if dividend stocks were the next investment craze destined to fade. My response? Not a chance! Admittedly, investor interest in dividend stocks keeps perking up. But that’s a by-product of artificially depressed interest rates. Not the sign of an investment bubble.

I mean, we’d be terrible stewards of our hard-earned capital if we just rolled over and accepted the going rates on certificates of deposit or U.S. Treasury bonds. So it’s only natural for investors to be on an aggressive hunt for yield when the average money market pays next to nothing. Literally. It’s true, too, that companies paid out a record amount in dividends last year. A total of $281.5 billion for S&P 500 companies, to be exact. And it’s impossible for companies to keep paying out record amounts every year for eternity. But trust me. We’re nowhere near the end of the dividend bonanza. Here’s why… Reason #1: Payout Ratios Remain Low

Source: Wall Street Daily

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