Dividend-paying stocks are usually the only equities I recommend when asked by friends what they should have in their portfolio as a long-term holding. Investors have historically increased their odds of success by limiting their allocations to investments with a yield. Originally, a dividend payment was the catalyst for to invest and risk capital and all stocks that were able paid one. The emphasis on long-term holding shifted towards price speculation as market transaction efficiencies improved, and costs declined.
Many stocks could pay a dividend but currently choose not to. Some are more likely than others to begin. I search for companies that are more likely than average to begin paying dividends. It can take a long time between identifying a likely candidate and the Board of Directors pulling the trigger and declaring one -- however, when you get it right, the payoff can be substantial: Lululemon Athletica (LULU), Cognizant Technology (CTS) and Juniper Networks (JNPR).
Source: The Street
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