Dividends4Life: 3 Hidden Risks of Dividend Stock Investing

3 Hidden Risks of Dividend Stock Investing

Posted by D4L | Wednesday, July 09, 2014 | | 0 comments »

I recently joined Moe Ansari, host of the nationally syndicated radio show Market Wrap with Moe, to discuss some of the risks facing dividend stock investors. The three biggies I see are: Low Volatility Works Both Ways: Last year, the stock market went like gangbusters with 30% gains for the major indices. However, dividend stock funds such as Vanguard Dividend Appreciation ETF (VIG) or the T. Rowe Price Dividend Growth Fund (PRDGX) slightly underperformed.

Low Volatility Doesn’t Mean Low Risk: Even worse than broad-based dividend funds has been the performance of the Utilities SPDR (XLU), an ETF that focuses wholly on stocks in the utility sector and thus tends to be chock full of dividend stocks. A High Dividend Doesn’t Always Mean You’ll Get a High Return: There’s an old joke among investors who chase yield: The easiest way for a stock to see its dividend yield double is to watch its share price get cut in half overnight.

Source: InvestorPlace

Related Articles:
- Income Annuities vs. Dividend Stocks
- 7 Tech Stocks With A History of Growing Their Dividends
- Here's Where To Find Great Dividend Stocks
- 8 Higher-Yielding Consumer Stocks With A History of Rising Dividends
- 10 Dividend Stocks For The Ultimate In Deferred Gratification

Click here to have future posts delivered to you for free!

________________________________________________________________

0 comments

Post a Comment

Note: Only a member of this blog may post a comment.

~

Popular Posts Last 30 Days