The phrase of the moment is that the dividend trade is becoming ‘too crowded.’ To which I say, “who cares?” This is one time when it does pay to go with the crowd. Other times to follow the crowd are when low P/E stocks are in vogue, or when too many savvy investors start buying after a big decline or a decade of flat or lousy stock returns. The reason these are all smart investing moves is that no matter how many people may fret that they are crowded trades you are buying quality at a discount. By focusing on dividends you are largely looking at the universe of lower P/E and value stocks and ignoring dangerous high-multiple growth stocks, plus you are getting an immediate return on your investment.

Investors are more likely to hold onto a stock when they know that a stable or rising dividend is going to be paid every few months and they see either the cash flow or additional shares of the security (if they dividend reinvest) in their accounts. While most Americans are used to quarterly dividends, many overseas countries pay their dividends only semi-annually which makes holding them harder. A growing trend in the U.S. is to pay monthly dividends, a trend that we owe to our Canadian neighbors who have many income-related securities and remnants of royalty trusts that pay monthly.

Source: Market News Video

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