How to Find High-Yielding Dividend Stocks

Posted by D4L | Tuesday, February 07, 2012 | | 0 comments »

Doing the required research to determine which dividend-yielding stocks should be in your portfolio is a daunting task. Consider investing in dividend exchange traded funds instead. Investors, roiled by record volatility, have looked high and low for big dividends. Given that the Federal Reserve plans to keep interest rates at close to zero for at least another three years, dividend investing probably will gain in popularity.

Investing in individual stocks is risky. It's easy to make the mistake of buying a stock with an accidental dividend yield -- those that have inflated dividend yields because of a steep drop in the stock price. An example is Frontier Communications(FTR_). With a 15% yield, it is the highest-yielding stock in the Dow Jones Industrial Average and S&P 500 Index combined. A safer way to grab higher yields is through mutual funds or ETFs that focus on dividend stocks. Comparing the two, mutual funds have a history of chronic underperformance versus benchmarks, whereas ETFs tend to be successful in mimicking benchmark indices. Other benefits to investing in ETFs over a mutual fund include lower costs and taxes, ease of trading and higher liquidity.

Source: The Street

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