The Right Dividend Stocks

Dividend stocks have never been more popular. But even if you decide to heed the advice that thousands of professional advisors are giving their clients and pick up some dividend stocks for your portfolio, your work is far from over. All too often, people think of all dividend stocks as being roughly the same. That notion obscures the truth that just because two stocks happen to pay dividends doesn't mean they have anything else in common -- and if you treat them as roughly the same, you could be in for a big surprise.

Many investors are looking to dividend stocks for the wrong reason: as a replacement for bonds. No stock can truly give you the security that a Treasury bond provides. But the next best choices are stocks that trade at low valuations and have healthy but sustainable dividend payouts. One promising stock for conservative investors is Intel. It trades at just 11 times trailing earnings, yet it yields more than 3% and has been boosting its dividend for some time. With its legacy PC-chip business, it's plenty strong, but it's also moving into the mobile field. That potential growth could make a big difference in its long-term prospects.

Source: MSNBC

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