Dividends4Life: How Long Will The Dividend Stock Craze Last?

How Long Will The Dividend Stock Craze Last?

Posted by D4L | Saturday, January 21, 2012 | | 1 comments »

There's no free lunch, as they say, and that holds true in investing. At least most of the time. If there is anything close to a free lunch in investing, it might be the dividend. In 2011, investors embraced the dividend en masse. Stocks that were once unheralded, like Eli Lilly (NYSE:LLY), were acting like some of the most exciting names. Hold on, Eli Lilly? If you're a student of the stock market, you know that Eli Lilly is hardly considered a growth stock. Since the 2008 and 2009 recession, Eli Lilly has hovered around $35 per share, but the approximate 4% dividend has kept investors in a stock that showed little capital appreciation for years.

All of that changed in the middle of 2011, when investors began pouring into dividend stocks like Eli Lilly. What is a dividend stock, why did investors suddenly fall in love with these less-than-exciting names and will the trend continue in 2012? Names like Eli Lilly and Kraft not only pay a healthy dividend, but in the second half of 2011 they also awarded shareholders with capital growth. Right now, the prices of these stocks are high, which makes the dividend yield much lower. Be patient if a name you like has seen a large rise in price. There will likely be a better time to buy in the not-so-distant future.

Source: Investopedia

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1 comments

  1. High Dividend Mutual Funds // January 22, 2012 at 11:54 PM

    The trick is to be patient and hang in there, and also keep looking out for those hidden gems that are still undervalued and are paying good dividends. Very useful information in this blog, keep writing.

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