Dividend Investing

Yahoo  Nov 24  Comment 
Longtime Wall Street strategist Richard Bernstein hasn't quite gotten used to investors' reactions when he tells them his favorite asset class for 2015 is the same as in 2014 - high- yield municipal bonds. ...
Forbes  Nov 21  Comment 
In recent years, I noticed that any investment using the phrase "high yield, no risk" was always trouble.
newratings.com  Nov 19  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                19 November 2014 Net Asset Value The unaudited net asset value (NAV) of the ...
Dividend Growth Investor  Nov 19  Comment 
I enjoy dividend investing, because it is always challenging but it is also very rewarding. I have a set level of basic guidelines such as my entry criteria I apply on the list of dividend champions and achievers, in order to identify companies...
newratings.com  Nov 17  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                17 November 2014 Net Asset Value The unaudited net asset value (NAV) of the ...


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Dividend investing focuses on selecting solid companies that pay a regular and growing dividend. Investing for dividends in the U.S. has been gaining in popularity since The Jobs and Growth Tax Relief Reconciliation Act of 2003 created qualified dividends, which are taxable at a 15% federal rate or 5% for taxpayers in the two lowest tax brackets. Many other countries, such as Canada, have preferencial income tax treatment for dividends earned.

As noted in the article Seven Important Reasons for Dividend Investing , stocks that pay dividends provide several advantages over those that do not, including:

  1. Dividends provides stability to your investment
  2. Dividends can't be manipulated or faked
  3. Dividends provide continuous feedback
  4. Reinvested dividends provided a significant portion of the historical equity returns
  5. Good dividend companies grow their dividends
  6. Spending dividends in retirement, does not harm your principle investment
  7. A dividend portfolio is relatively low maintenance

However, as with any investment, there are some cons as well. These include:

  1. Dividend payments are not consistent. They can change and should not be relied on as a guaranteed paycheck. If a company becomes less profitable, payments may decrease or be suspended altogether.
  2. Payments are still subjected to income tax.
  3. At the end of the day, dividend stocks may not yield as much profit to investors as common stock investors.
  4. When the yields rise in the market for other shares, stock prices may go down as companies compete for investors.


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