Dividends4Life: Dividend Stocks Can Be Dangerous

Dividend Stocks Can Be Dangerous

Posted by D4L | Thursday, June 27, 2013 | | 0 comments »

If you have been struggling to generate enough income from your investment portfolio lately, then dividend stocks have been just about the best way to get the cold, hard cash you need. But before you simply accept the conventional wisdom about why dividend stocks are superior to other types of investments, you should keep in mind that in certain circumstances, dividends have almost nothing to do with the fundamentals of a business.

But just because solid businesses tend to produce lucrative dividends doesn't mean that companies that pay lucrative dividends all have solid businesses. Let's take a look at two situations in which dividend stocks can be downright dangerous: Case 1: A deteriorating business and Case 2: Artificially high payouts.

Source: Motley Fool

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