Dividend Stocks You Can Depend On

Millions of investors rely on their portfolios to help provide them with enough income to make ends meet. Given how low interest rates on bonds and other fixed-income products have gotten lately, more investors are turning to dividend-paying stocks to make up the shortfall in their overall income. When you're hungry for income, it's tempting to grab up the highest-yielding stocks you can find. But among U.S. companies, you can often do better by sticking with yields that are slightly lower, if you can also identify stocks that will keep delivering the dividend goods year after year after year. Later in this article, I'll share some of those stocks, but first, let's look at why you don't always do best taking the high-yield road.

Morgan Stanley recently did a survey that divided U.S. dividend-paying stocks into five equally sized groups. The stocks with the highest yields went into the first group, the next-highest-yielding stocks went into the second group, and so on down to the lowest-yielding stocks in the fifth group. The company then compared performance among the groups. What Morgan Stanley found was that unlike in other countries, U.S. stocks that had the highest yields didn't have the best performance. Rather, it was the second highest yielding group that put in top returns.

Source: Motley Fool

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