The big conundrum for ... average investors today is they are frightened by the stock market, but they're not happy with the returns they get in safe money market funds," said John Buckingham, chief investment officer at Al Frank Asset Management in Laguna Beach, Calif. That's why retirees are so attracted to dividend-paying stocks that provide a steady income as well as the potential for capital growth if the stock price appreciates.
It's important when building a dividend stock portfolio to pick high-quality companies with long track records of paying dividends that have increased over time. "Dividend-paying stocks offer a couple of benefits," said Mark Luschini, chief investment strategist for Janney Montgomery Scott, Downtown. "Usually the payer of the dividend is a company whose financial situation is very stable and therefore tends to decline less in share price when the stock market swoons.
Source: Pittsburgh Post-Gazette
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