Income Investing with Dividend Stocks

When I was a stockbroker with a Wall Street firm, it was very common to make fun of investors focused on income. In the old days, many bonds came with coupons that investors clipped and then cashed. Nothing was worse than being labeled a “coupon clipper.” But with bond interest rates remaining at record lows and concern over rising inflation, investors are hungry for higher yields and have developed a keen appetite for collecting dividends. It’s about time.

Dividend-paying stocks provide a consistent stream of income for their shareholders, with the bonus of lower risk compared to high-growth stocks. What many don’t know is that numerous studies show that over time, dividend-paying stocks greatly outperform their go-go growth stock brothers. Dividends also better align management with the interest of minority shareholders and can help investors identify healthy companies with strong balance sheets and cash flows. A word of caution, though: nothing can tank a high-dividend stock faster than a cut in its dividend. So you want entrenched, well known consumer brands plus a strong record of management protecting and growing a company’s dividend to go along with above-average current dividend yield.

Source: Wealth Daily

Related Articles:
- 9 Dividend Stocks Beating The 4% Rule
- How To Buy Dividend Stocks At The Bottom
- 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends
- Three Keys For Successful Dividend Growth Investing
- 12 Dividend Stocks With A Quick Payback