Dividend Investing

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SeekingAlpha  8 hrs ago  Comment 
By Stock Gamer: The share price of Coca-Cola Company (NYSE:KO) has recovered from a recent pullback. Despite trading close to its 52-week high of $42, I believe the stock remains a buy for long-term income investors as its current valuation is...
Dividend Growth Investor  10 hrs ago  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 four have been selected from...
SeekingAlpha  Aug 29  Comment 
By Stock Gamer: Cisco's (NASDAQ:CSCO) share price recently experienced a 5% pullback from its 52-week high. From a dividend investing perspective, I believe the hiccup presents a great buying opportunity for long-term income investors as the stock...
newratings.com  Aug 29  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                29 August 2014 Net Asset Value The unaudited net asset value (NAV) of the Company...
SeekingAlpha  Aug 28  Comment 
By Stock Gamer: Procter & Gamble's (NYSE:PG) share price has recently recovered from its 6-month low. Although the price almost converged to its all-time high at $86, I believe the stock remains a solid buy for long-term income investors as...
SeekingAlpha  Aug 28  Comment 
By Scott Arterburn: Junk bonds, also known as high yield bonds, have been very popular over the past few years. This year alone by the end of May there had been a total inflow of over 5 billion dollars into high yield bonds. One reason for this...
newratings.com  Aug 28  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                28 August 2014 Net Asset Value The unaudited net asset value (NAV) of the Company...
SeekingAlpha  Aug 25  Comment 
By Reuben Sushman: Market Vectors High-Yield Municipal Index ETF (NYSEARCA:HYD) according to Yahoo, seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Municipal Custom High Yield...
Financial Times  Aug 25  Comment 
In functioning markets, prices fall, selling eases, buyers enter and a new clearing price is established, which is what happened in global high yield
SeekingAlpha  Aug 24  Comment 
By Stock Gamer: Share price of ConocoPhillips (NYSE:COP) has recently experienced a 7% pullback from its 52-week high. The dip certainly has attracted a lot of attention from potential buyers who are interested in knowing the relationship between...




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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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