We're asking ourselves the wrong question about dividend stocks. That thought occurred to me while I was reading a USA Today column that highlighted the fact that dividend stocks currently give you a much better current return than other vehicles: "Dividends are especially important in these days of low interest rates. The average money fund yields 0.03%, according to iMoneyNet, which tracks the funds. And you'd be lucky to get more than 1% on a one-year CD."
That snippet, along with much of the rest of the article, is a good answer to the question: "Why should I buy dividend stocks?" But that's really an odd question for investors to be asking. The more appropriate question than "Why should I buy dividend stocks?" is "Why did we suddenly stop focusing on dividend stocks?" As the USA Today column rightly points out, in decades past the dividend was a primary, if not the primary, driver for equity investments. So what changed? Part of it was the increased focus on the academic view of efficient markets. From many an ivory tower in academia, the markets were viewed as a supercomputing mechanism that properly priced stocks to reflect all known information, which included capital-allocation decisions like a dividend payout. In essence, this said that the value of your investment ended up the same regardless of whether or not profits were paid out.
Source: Motley Fool
Related Articles:
- The Most Important Thing To Consider When Selecting A Dividend Stock
- 3 Powerful Concepts for Compounding Wealth with Dividend Stocks
- 11 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income
- 4 Secrets To Finding The Best Dividend Stocks
- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
Wrong Approach to Dividend Investing
Posted by D4L | Tuesday, April 10, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
If you're worried about inflation rearing its ugly head next year, you should probably worry about more likely catastrophes, such as bei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
In this article, we discuss 5 best consumer staples dividend stocks to buy now. If you want to read our detailed analysis of the consumer st...
-
If you've been holding back from investing in your future just because you don't have a lot of extra cash to spare, I've got gre...
-
Dividend stocks cater to investors who want less volatility and stable cash flow. Some dividend stocks offer a combination of respectable yi...
-
I stumbled upon some data a few years back that has altered my investment philosophy. According to data by Ned Davis Research and Hartford F...
-
Following a strong year for the S&P 500 and huge gains for the tech-heavy Nasdaq Composite, it's a lot more difficult to find reason...
-
The company's remarkable consistency and low-risk business model make it a "first-choice investment opportunity," according to...
-
One way to achieve financial freedom is to create passive income, or income that does not depend on your active involvement beyond a certain...
-
If you are here to build a portfolio that thrives in all seasons, consider dividend stocks. They can generate steady returns and provide sta...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.