Should I Invest In Dividend Stocks?

Q: I have been looking to invest my extra cash from SDA since last year. My bank offered me to put it in a long-term retail bond, but the net returns are so low that I am thinking of buying stocks instead. But then, I am afraid that I may just lose my money because the market is not so good. I am confused. Can you help me? – Roque Paragua by e-mail

A. While many people invest in the stock market primarily to make money from capital appreciation, you must not forget that stocks also offer good alternative investment for generating regular income, just like interest income provided by your favorite money market funds. If you are looking to park your extra cash in a 5-year or 10-year retail bonds that pays coupon rate of 3 percent to 5 percent annually, you may consider investing in stocks that pay better than bonds in the form of dividends. Recent fall in share prices have resulted in a number of attractive stocks that offer high dividend yields in the range of 5 percent to 7 percent per annum. Because dividend payments are always in the form of fixed amount per share, the lower the share price gets, the higher the dividend yield.

Source: inquirer.net

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