Before the financial crisis, prudent investors counted on CDs, U.S. Treasuries and savings accounts to provide them with decent interest income for their retirement. But thanks to Federal Reserve Chairman Ben Bernanke's zero interest rate policy, prudence has become a tough way to fund your golden years. With few places to find refuge and income, these cautious investors have been forced to look elsewhere-namely at dividend stocks.
Dividends, long used to pad portfolios with income, are no longer a risk-on or a boring way to invest. Not only do dividends add value, but with a careful selection across several sectors, an investor can build a nice portfolio covering a broad range of industries. What's more, dividend-paying stocks provide reliable returns at regular intervals, offer growth potential, and are not typically as economically sensitive as other high-beta and volatile companies. Another bonus is that when the economy wanes and stock markets fall, dividend stocks pay investors to wait it out until things improve.
Source: Money Morning
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