Is Dividend Investing Right for You?

Jeremey Glaser: Let's start with whom dividend-investing is right for--what kinds of goals you should have in mind before you start dividend-investing. Who do you think should look at a strategy like this?

Josh Peters: I think it's for anybody who eventually is going to need a stream of income for retirement, which is to say almost all of us. Maybe there are some people who have still got defined-benefit pension plans and that's going to take care of their retirement; but for most of us, we've been handed this really tough task that frankly they don't teach in school very much--certainly not to everybody--which is how do you put away enough money for retirement and then convert those savings into a flow of income? Dividends may not be the entire solution for either saving up for retirement or providing that stream of income while you're in retirement, but they are very well positioned to be a very large part of the solution for most people. And the opportunity to combine both the total-return aspect--the capital appreciation and inflation-hedge aspect that you get from the stock market--with the predictable income component that you can get elsewhere only from fixed income. And to do that simultaneously--have that portion of your portfolio hitting to both sides of the field--that's pretty valuable.

Source: Morningstar

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