Why I Prefer Dividend-Paying Stocks

I much prefer dividend-paying stocks to fixed income instruments such as CDs and bonds. I have a portfolio of 25 dividend-paying stocks designed for income-oriented investors. The yield on that portfolio is around 3.1%, which is higher than the CD rate and the 10-year treasury rate. In addition to the income component of the portfolio, investors also have a chance to participate in capital appreciation.

One name in my income portfolio of dividend-paying stocks is Wells Fargo (NYSE:WFC). Not only has Wells Fargo stock beat the 6.8% return of the bond market over the last 5 years, it has also beat the S&P 500 Index, gaining more than 20.1% over that time period. Over the last 3 years, its outperformance has been even better, posting a 3-year average return of 25.6% relative to the S&P 500 Index return of 13.5%. Over the last 12 months, Wells Fargo stock is up 26.6% and its year-to-date return is almost 16%. It has been a top performer in the market.

Source: Seeking Alpha

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