Dividends4Life: Dividend Stocks Are Cheap

Dividend Stocks Are Cheap

Posted by D4L | Sunday, September 12, 2010 | | 0 comments »

Throughout much of the past several decades, investors have had a decision to make when considering how to allocate their money. Bonds typically provided higher yields than stocks, but with most bonds, the interest payments you receive represented the only return you could expect from your investment. Meanwhile, if you wanted to have a chance at capital appreciation, investing in stocks usually meant accepting a lower dividend yield in exchange.

I don't think dividend yields will stay this far above bond yields very long. That may happen due to rising stock prices that will reduce dividend yields, or falling bond prices that will close the gap between yields on bonds and stocks. Whichever way that happens, though, dividend stocks look like a much better buy than bonds right now. Even with such high levels of uncertainty about the economy, attractive yields on dividend stocks give them a margin of safety you simply don't have with bonds right now. If you still have a big portion of your money in the bond market, take a closer look at dividend stocks and see if they might give you a better way to achieve your long-term financial goals.

Source: Motley Fool

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