Dividends4Life: You Can Do Better Than Bonds

You Can Do Better Than Bonds

Posted by D4L | Sunday, September 19, 2010 | | 0 comments »

The U.S. 10-Year Treasury bond is a safe investment... right? For the most part, yes. The U.S. government -- for all its flaws -- is not likely to go bust tomorrow. But yields have been sliding for nearly 30 years, and we haven't yet seen the bottom. At the same time, bond prices have been climbing in near bubble-like fashion. That means investors are spending more for a lower yield, all in the name of safety.

Investors looking for value in the stock market sometimes discard companies that offer regular dividends. In many cases, these investors would rather see that cash pumped back into the company. But dividend stocks, over the long term, have outperformed non-paying stocks. According to Ned Davis Research and Income Stock Report, "dividend stocks on the S&P 500 generated a total return of 10.19% per year compared to the 4.39% generated from non-dividend stocks" over the past 30 years through November 2009. And the difference between the two has been widening over the past couple years.

Source: Taipan Publishing

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