Dividends4Life: Beat Treasuries With Dividend Growth Stocks

Beat Treasuries With Dividend Growth Stocks

Posted by D4L | Tuesday, July 17, 2012 | | 0 comments »

The hunt for yield is stronger than ever. But now it's harder to find. There are plenty of stocks that pay dividend yields in excess what the U.S. Treasury is offering. It's not difficult to outpace a yield of just over 1.5%, after all. That's where the 10-year Treasury bond is, thanks to its status as a safe haven for investors around the world. Many Americans, concerned more about preserving capital than making a return on their money in this volatile environment, often forget to take into account how inflation affects their investment. Because inflation is 1.7%, they're actually losing money on the 10-year bond.

Higher-yielding, dividend-paying stocks have been a top choice by investors looking for decent return and steady stream of income over the past few years. And now those higher-yielding stocks trade at about a 20% premium to stocks with high dividend growth. A lot of professional investors are turning to dividend-growth stocks over high-yielding stocks, and not just for the relatively cheaper valuations. Only high-quality and healthy companies can afford to grow their dividends steadily. With cash on corporate balances sheets at high levels and dividend-payout ratios at their lowest levels since the start of the 20th century, there's good reason these types of companies make a good investment.

Source: The Street

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