Dividend Stocks Often Better Than Bonds

People investing for retirement are often faced with the question of whether it would be better to invest in low risk bonds or choose stocks that pay dividends for their retirement accounts. While bonds are considered a relatively safe investment, many financial professionals recommend holding some dividend stocks in your retirement portfolio to increase your financial security during your retirement years. In fact, dividend stocks are often better than bonds for retirement investing for a number of reasons.

While bonds have traditionally been viewed as a sure bet for retirement investing, the low yields of today mean that you must invest nearly $1 today for every $1 you want to take out in retirement. Investing your retirement funds in dividend stocks allows you to earn a considerable retirement income while still taking advantage of the growth of the stock market. As the price of the stock and the value of the company rises, the company will often increase the dividend amount disbursed to stockholders of record on a monthly, quarterly, or annual basis. An annual yield of 3 percent in dividend stocks will go a long way towards helping combat the effects of inflation on your retirement accounts.

Source: IRA Market Report

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