Dividend-paying stocks should be a part of most retirees' portfolios. Over time, dividends account for an enormous part of the stock market's earnings. For example, the Standard and Poor's 500-stock index has gained 209 percent the past 20 years. Throw in reinvested dividends, and it's up 370 percent.
For retirees, dividends are especially useful. Most bonds will never increase their interest payments. But companies can increase dividends over time, which offers some inflation protection. Although it's entirely possible for companies to cut dividends - and many did during the past recession - they will often go to great lengths to avoid doing so. Cutting a dividend is a sign of weakness, and on Wall Street, they eat the weak.
Source: News-Press.com
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