Are Dividend Stocks A Safe Investment?

The stock market crash from 2008 changed investor confidence in the stock market and now people want investments that are rock solid. Investors are more concerned with protecting their money and the low interest rate environment make safer investments like GICs and the Bond market unappealing. So where does the average investor put their money in this low yielding market environment? Many investors have flocked towards Dividend Stocks because they perceive them to be safe investments and they offer higher yields than the bond and cash markets. Dividend stocks offer the potential for capital appreciation and tax preferential dividend payments.

Now these Blue Chip stocks have broken out of there stable price patterns into the world of the growth stocks and the industry can’t stop talking about them. Is the current craze about Dividend Stocks a good thing? Have Dividend stocks become the latest fad, the hot potato, the sector where all the money is flowing? The sector in-play eventually becomes the most volatile and the fast appreciation is always followed by a sharp sell-off. These moves take time and when we start talking about stocks we normally don’t talk about, it shows a change in sentiment in those stocks. That is the first warning signal.

Source: ETF Daily News

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