Why Dividend Stocks are Some Investors’ Darling

Investors haven’t forgotten their mega losses when the market tanked just a few short years ago. It’s not surprising then, that some investors are rethinking dividend stocks and deciding they should be in their portfolio. What is a dividend stock? Simply put, for every share of a dividend stock that you own, you are paid a portion of the company's earnings. You benefit merely from owning the stock.

Dividends have played an important role in the returns achieved by investors. For example, dividends have accounted for about 50% of the S&P 500 Index’s total return since the 1940s, says ReKeithen Miller, a certified financial planner with Palisades Hudson Financial Group. Dividend-paying stocks tend to be established companies in relatively stable industries. "Think Johnson & Johnson, Wal-Mart, Exxon Mobil, to name a few," says Miller. "Unlike growth stocks where returns are mainly from capital appreciation, dividend stocks take a page from Jerry Maguire and they show investors the money," says Miller.

Source: depositaccounts.com

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