Dividends4Life: Dividend Stocks That Yield Twice as Much as Treasuries

Do you know what the ultimate investment protection is? It's not gold, and it's certainly not Treasuries. It's dividend stocks. Companies that pay consistent dividends are in better fiscal shape than the U.S. government and the payouts significantly outpace those of Treasuries. The advantage over gold of course is that the yellow metal yields nothing - it's simply a store of value. And yet dividend stocks also protect against inflation, since profits for the companies behind them tend to rise alongside prices.

To understand the advantages dividends can provide an investor during a down market, just look at the implosion of the dot-com bubble in 2000. According to Morningstar research, the Standard & Poor's 500 Index lost 9%, while dividend-oriented mutual funds - including high-yielding stocks in the financial-services, mutual-fund and real-estate sectors - gained anywhere from 10% to 30%. And I shouldn't need to remind you that dividends account for the majority of the stock market's returns. A study by Yale economist Robert Shiller showed that in the 109 years from 1889 to 1998, the average real return on common stocks was 7%, of which 4.7% was represented by dividends.

Source: Money Morning

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