Dividends4Life: What You Must Know About Dividend Stocks

What You Must Know About Dividend Stocks

Posted by D4L | Wednesday, September 01, 2010 | | 0 comments »

The dividend stock will never be the biggest winner in the room. It won't make headlines. But the dividend table has the best odds. Study after study has confirmed that. For instance -- and don't get me started here -- Ned Davis Research found that from 1972 to 2006, non-dividend stocks in the S&P 500 returned just 4% annually, while dividend payers returned 10% annually. Sure, the biggest winners came from the non-dividend group, but the odds of finding them in advance are very low. I'll rub elbows with old ladies all day long if I'm making money (and friends) in the process.

In fact, a monkey throwing darts at dividend stocks may be able to beat the S&P average. One way to start is by finding a few stable dividend companies that you'd like to own even without the yield. A rookie mistake is to sort stocks by yield and just buy the highest. Often, yields above 9% come from companies on shaky ground -- the stocks have been hammered, making the dividends look high in comparison. It's best to start with safe companies and then build out.

Source: Motley Fool

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