Dividends pad returns

With CDs and U.S. Treasury bonds paying almost no interest, where is an individual supposed to turn for income? Increasingly, analysts are challenging investing principles about risk and suggesting solid, well-known, dividend-paying U.S. company stocks as near-bond substitutes.

Stocks, of course, are never to be considered pure substitutes for bonds. When companies go bankrupt, stock investors typically get nothing while corporate bond investors usually get something. (Investors in U.S. Treasury bonds have always been repaid every cent.) So disciplined investors are told to delineate stocks and bonds - holding bonds for safety, even when they pay little interest, and stocks for the chance of making more money in the long run.

Source: The Modesto Bee

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