Dividend-Paying Stocks For Retirees

As you prepare or file your 2012 tax return, you need no reminder that cash pays near-zero interest. Bond yields are little better. And secondary-market bond prices will be clobbered by eventual rate increases. Retirees, who typically rely on investment income, feel the pinch the most. Instead, consider dividend-paying stocks. Many yield the same or more than bonds. Plus their payouts can grow over time. And their potential price gains tend to top bonds'.

The dividend yield on the S&P 500 index is around 2% now. That's about the same as the interest yield on the 10-year Treasury. Many S&P 500 companies pay higher dividends. 3M's (MMM) yield is 2.4%. Intel's (INTC) is 4.1%. And dividends' tax benefits can help you keep more of that cash flow. Special low rates apply to long-term capital gains and to qualified dividends. Most stock dividends paid to investors qualify for the bargain tax rates. There's a 0% tax rate on dividends paid to low-bracket taxpayers.

Source: Investor's Business Daily

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