Dividends4Life: Dividend Stocks Beat Bonds

Dividend Stocks Beat Bonds

Posted by D4L | Sunday, July 31, 2011 | | 0 comments »

For older investors seeking reliable income, quality dividend-paying stocks have always been a compelling alternative to bonds. With interest rates still near record lows, payouts on cash and bonds are negligible, plus there are three other disadvantages.

First, interest income is taxed harshly outside registered plans like RRSPs and TFSAs. Second, given rising amounts of inflation, interest-bearing investments may not provide a positive “real” rate of return net of inflation. And third, once interest rates do start rising, bond prices may fall, inflicting capital losses, particularly on issues with longer maturity dates.

Source: Times Colonist

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