RECENT NEWS
Forbes  Jun 7  Comment 
In trading on Friday, shares of the Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (AMEX: BSJD) entered into oversold territory, changing hands as low as $25.37 per share. We define oversold territory using the Relative Strength Index,...
Scott's Investments  Jun 7  Comment 
In December 2010, I created a screen/hypothetical portfolio called the “High Yield Dividend Champion Portfolio.” The screen is tracked publicly as a continuous hypothetical portfolio with a starting balance of $100,000 on Scott’s...
Market Intelligence Center  Jun 6  Comment 
Iboxx $ High Yield Corporate Bd (AMEX: HYG) closed Wednesday's trading session at $91.56. In the past year, the ETF has hit a 52-week low of $87.31 and 52-week high of $96.30. Iboxx $ High Yield Corporate Bd (HYG) has been showing support around...
Dividend Growth Investor  Jun 1  Comment 
For your weekend reading enjoyment, I have highlighted a few interesting articles from the archives, which I find to be relevant today. The first five articles have been written and posted on this site, while the last five have been selected from...
Dividend Growth Investor  Jun 1  Comment 
For your weekend reading enjoyment, I have highlighted a few interesting articles from the archives, which I find to be relevant today. The first five articles have been written and posted on this site, while the last five have been selected from...
Sensible Investments  May 31  Comment 
I have written several times about avoiding intermediate and long term bonds in portfolios and concentrating on short term high yield etfs (SJNK yielding 4% and Hyld yielding 8%) as a major part of bond portfolios and as a place to park cash along...
Forbes  May 28  Comment 
It has been a record year so far for private equity sponsor-backed high-yield activity in Europe, thanks in part to the flexibility that the asset class is offering. Last week’s debut bond transactions from Integrated Dental Holding...
Market Intelligence Center  May 24  Comment 
We all know about the current dividend investing trend. With CDs and Treasuries yielding less than 2%, your best shot at income is to seek out stable dividend payers. The best income stocks offer big dividends, decent share appreciation and...
The DIV-Net  May 11  Comment 
I realize that there are some people who have found my blog recently for the first time. I've been receiving some emails from readers asking for information on how to start out dividend growth investing and really where to begin. This is important...
Forbes  May 10  Comment 
U.S. leveraged finance volume for the week ended May 9 totaled $27 billion, the most since the third week of March, according to LCD, a unit of S&P Capital IQ. Leveraged finance volume comprises leveraged loan activity plus high yield bond issuance.




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Overview

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.

References

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