We are fast becoming dividend nation. Morgan Stanley Smith Barney recently pointed out that assets in ETFs with a dividend-based investing theme has jumped from barely $5 billion in 2008 to more than $40 billion today. Nothing wrong with that in principle. But newbies chasing the highest yielders could be missing out on finer points of dividend investing.

With a fat 5.3% dividend yield, AT&T (T) looks like dividend ambrosia. But it’s not exactly easy to make those payouts. Granted, getting paid 5.3% is pretty good compensation. But dividend hikes have barely kept pace with inflation. Compare that to Royal Dutch Shell (RDS.B), with a dividend yield of 5%, has a dividend payout ratio below 40% and has a dividend growth rate over the past five years that is about double AT&T’s.

Source: Forbes

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