Dividends Fund Your Retirement

Lots of long-term investors love dividend stocks, and with good reason. Simply put, the best dividend stocks give you reliable gains year in and year out, thanks to that steady stream of dividend income. This is especially true if you can keep the tax man away by holding your dividend stocks in an IRA. Deferring the need to pay taxes (or avoiding them altogether with a Roth IRA) lets you reinvest all of those dividends, giving you more shares to grow with the market over time.

Every year, Standard & Poor's publishes a list of what it calls "Dividend Aristocrats." Despite the slightly dorky name, it's a really useful tool: All of the companies listed have raised their dividends at least once every year for the last 25 years. That's an impressive feat, particularly when you think about the gyrations we've seen in the market (not to mention the economy) over that time. Lots of companies have cut or even eliminated their dividends during hard times, but these firms not only kept paying, they kept boosting their payouts. That's why the Dividend Aristocrats list is one of my favorite places to look for solid, established companies that I can count on to pay a good dividend year in and year out -- the kinds of companies that will look particularly good in our retirement portfolios.

Source: Motley Fool

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