Dividend Stocks to Play Defense

Dividend stocks provide investors with steady income but it comes at the expense of big gains. Small- and mid-cap stocks are riskier but that's justifiable as economic growth accelerates. Such was the case this year, as the Russell 2000 Index has rallied more than 25% while the S&P 500 is up 12%.

Tasho and other money managers point out attractive characteristics of under-loved large-caps. Most notably, the price-to-earnings (P/E) ratios are low, which makes these stocks "cheap" on a valuation basis. In addition, corporate balance sheets are carrying $2 trillion that will likely be deployed through mergers and acquisitions, share repurchases or increased dividend payouts. While mid- and small-cap stocks offer better growth potential, they typically don't offer an outsized dividend and aren't inexpensive based on valuation.

Source: TheStreet.com

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