Dividends rarely get the respect they deserve, especially from beginning investors. That’s because a dividend-paying stock’s yearly 2–3 percent or 5 percent yield barely seems worth mentioning alongside yearly capital gains of 10, 20, or 30 percent or more. But dividends are far more reliable than capital gains. A stock that pays a dividend of $1 this year will probably do the same next year. It may even raise it to $1.05. So with today’s low interest rates, investors are paying more attention to dividend yields.
A couple of decades ago, you could assume that dividends would contribute up to a third of your long-term investment returns, even without the tax-cutting effects of the dividend tax credit in Canada. In the early years of the past decade, dividend yields were generally too low to provide a third of investment returns. But since yields have moved up and interest rates remain low, it’s realistic to assume they will again contribute as much as a third of your total return.
Source: The Epoch Times
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Why the Best Dividend Stocks Are Your Most Reliable Investment
Posted by D4L | Thursday, October 09, 2014 | ArticleLinks | 0 comments »________________________________________________________________
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