Dividend Stocks Worth the Risk

With so much for investors to worry about in 2012, from a potential Greek default to persistently high unemployment, it's no wonder they are thirsty for yield, particularly dividend-paying stocks. But with the dividend strategy becoming a crowded space more and more each day, investors would be smart to look more closely at individual company fundamentals rather than blindly chase a high-yielding name. Thus far in 2012, growth stocks have been outperforming most dividend-paying stocks. The Russell 2000 Growth Index is up more than 7% this year already, compare a rise of 4.8% on the S&P 500.

With so much uncertainty due to Europe's debt crisis and worries over a hard landing in China, that performance could reverse and look more like 2011. Reviewing last year, dividend paying stocks outperformed non-dividend paying stocks. Those stocks with dividends increased 1.4% on average in 2011 while those without a dividend decreased 7.6% on average.

Source: The Street

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