Stocks in the Dividend Sweet Spot

Investors have a lot of good reasons for liking stocks that pay dividends. But dividend-paying stocks have one advantage that many people don't always realize. Paying a dividend ensures that the cash a business generates goes toward a legitimate purpose: paying back shareholders for their investment in the company.

Becoming a solid dividend stock doesn't happen automatically. Companies have to commit to adopting the mindset of paying a consistent and growing dividend before they ever see it come to fruition. But with all sorts of corporate excess running rampant, investors now recognize that the way of thinking about corporate capital that comes from paying a dividend also helps reinforce the responsibility that management teams have in safeguarding shareholder assets.

Source: Motley Fool

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