Dividends Were A Bright Spot In A Disappointing 2011

Stock investors ran in place in 2011. The Standard & Poor's 500 index is ending the year about where it started. Invest in a stock mutual fund, and you likely ended up losing because of fee expenses. About three-quarters of the U.S. stock fund categories that Morningstar tracks are closing out the calendar out with a loss. That's another knock for investors who are still stinging from their losses in the financial crisis of 2008. Although the market rebounded sharply beginning in March 2009, it's still about 20 percent shy of its peak in late 2007. Yet even in the gloom of 2011, there was a bright spot: dividend-paying stocks.

Dividend-payers are typically well-established companies that share profits through quarterly payouts, rather than plowing the cash back into the company to fuel growth. Stocks of smaller companies can offer greater long-term potential, but are more vulnerable when the economy stumbles, or when fears like the European debt crisis send stocks tumbling. Investors have been hard-pressed to find decent sources of investment income, which has made dividends more appealing.

Source: Knoxville News

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