The Dangerous Side of Dividend Stocks

With low interest rates having eliminated any chance of earning a decent income from bank CDs and other safe investments, millions of conservative investors have turned to dividend stocks. That would seem like a logical move. Yet in moving more of their money into the stock market, investors often forget that dividend stocks are a lot more dangerous than fixed-income investments -- and owning the wrong dividend stocks can end up burning you twice.

Pitney Bowes (PBI) gives us a textbook example to illustrate the dangers. When it comes to solid dividend stocks, Pitney Bowes looked incredibly attractive to many investors. The stock sported a sky-high dividend yield of nearly 10 percent, and even more importantly, Pitney Bowes had demonstrated its commitment to increasing its dividend payouts over time, with a 30-year track record of boosting its dividends on an annual basis. Yet that track record didn't stop the company from slashing its dividend in half after it announced its most recent quarterly earnings.

Source: Daily Finance

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