Dividend Stocks To Combat The Fiscal Cliff

Dividend stocks represent a solid investment choice with the fiscal cliff, which includes automatic tax hikes, looming on the horizon, some financial advisers say. One is Barbara Reinhard, chief investment strategist at Credit Suisse Private Bank. She sees two factors arguing in favor of dividend stocks, according to The New York Times. First, the price-earnings ratios of dividend stocks are below their historical norms. And second, companies raising their dividends now have solid, diversified balance sheets, which should buoy them in case of a fiscal crisis.

If Congress and the White House do nothing, the top dividend tax rate will soar to 39.6 percent, plus a 3.8 percent Medicare surtax for high-income earners, as of Jan. 1 from 15 percent currently. Reinhard is not concerned about the expected increase for most investors, but others are worried. “That’s a big difference,” Rex Macey, chief investment officer of Wilmington Trust, tells The Times. “But we’ll know early enough next year, maybe after one or two dividend payments, what’s going to happen, so we’d rather wait.”

Source: NewsMax

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