Dividend-Paying Stocks May Energize Your IRA

Think about "carbo loading" your IRA. The energy-boosting carbohydrates in this case: dividend-paying stocks. Dividends are back in vogue as other income sources (the bond market, for one) disappoint, although their popularity has eased a touch from last year. Companies with the best track records of paying dividends are lagging the rest of the stock market this year. Their "safe-haven" status (think utilities, for instance) lost a little luster once the immediate danger of the European debt crisis eased.

The S&P 500 Dividend Aristocrats Index, which tracks companies that have raised dividend payouts for at least 25 straight years, returned 7 percent in the first quarter of 2012, trailing the 11 percent gain for the broader S&P 500. The Aristocrats paid out 8.3 percent, compared with the broader S&P 500's 2.1 percent last year. There's room for dividend-investing growth, however; the data show that S&P 500 companies are paying out 30 percent of their profits, shy of the long-running 52 percent average. Given prospects for upward movement, and over time, capital appreciation, many analysts remain bullish on dividend stocks.

Source: Chicago Tribune

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