Time To Buy Dividend-Paying Stocks

Yield-hungry investors might also be wise to take another look at an asset class many have shunned in recent years: dividend-paying stocks. Some, such as Verizon (VZ) and AT&T (T), are yielding well over 4%. Granted, dividend payers are not a perfect alternative to bank savings. Stocks can lose money and often do, and companies that run into trouble sometimes trim or eliminate their dividends. It would be foolish to put next week's grocery money into any stock, no matter how big the dividend.

No one can forecast the stock market for sure, but Jeremy Siegel, the Wharton business school professor and author of the bestseller Stocks for the Long Run, believes stock market risks are low enough to make dividends a good option for some money that at other times would be allocated to bonds. A key factor, he says, is the relatively modest "PE ratio" figured by dividing stock prices by annual corporate earnings. Siegel is bullish on the stock market, believing it can rise as much as 20% by the end of the year and continue to go up in coming years.

Source: The Street

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