Dividend Investing

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Finance Asia  Jan 28  Comment 
Big order book for seven-year deal highlights strong secondary market momentum in Asian high yield sector.
Finance Asia  Jan 27  Comment 
Big order book for seven-year deal highlights strong secondary market momentum in Asian high yield sector.
The Hindu Business Line  Jan 27  Comment 
Delhi International Airport Pvt Ltd (DIAL) has raised $288.75 million in an overseas bond sale on Tuesday. This is the first US dollar high yield corporate bond from Asia and In...
Finance Asia  Jan 27  Comment 
Indonesia's first prospective corporate bond issuer of the year hopes to take advantage of last week's strong spread tightening in the Asian high yield sector.
Finance Asia  Jan 26  Comment 
Indonesia's first prospective corporate bond issuer of the year hopes to take advantage of last week's strong spread tightening in the Asian high yield sector.
Equitymaster  Jan 22  Comment 
Posted by Equitymaster        In the world of investing, the companies paying good dividends are among the preferred group of stocks. The reason is simple. Dividends are difficult to manipulate; as they are directly paid to shareholders...




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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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