Dividend Investing

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newratings.com  22 min ago  Comment 
WASHINGTON (dpa-AFX) - The Treasury Department kicked off this week's series of long-term securities auctions with the sale of $29 billion worth of two-year notes on Tuesday, attracting above average demand. The two-year note auction drew a...
newratings.com  3 hrs ago  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                23 September 2014 Net Asset Value The unaudited net asset value (NAV) of the ...
Motley Fool  4 hrs ago  Comment 
QR Energy LP is a high yield stock, but is it the right stock for long-term dividend investors?
newratings.com  Sep 22  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                22 September 2014 Net Asset Value The unaudited net asset value (NAV) of the ...
Motley Fool  Sep 22  Comment 
Looking for a high yield investment to pad your income? Here is what you need to know about BP Prudhoe Bay Royalty Trust
SeekingAlpha  Sep 21  Comment 
By Reuben Sushman: SPDR Nuveen S&P High Yield Municipal Bond ETF (NYSEARCA:HYMB) is one of the few ETFs that focus on high yield municipal debt. With its appropriate symbol, it is also one of the most well known. We decided to analyze this high...
DailyFinance  Sep 19  Comment 
TORONTO, ONTARIO -- (Marketwired) -- 09/19/14 -- Brookfield High Yield Strategic Income Fund (TSX: BHY.UN) announces a distribution of C$0.1625 per unit for the quarter ending September 30, 2014. The distribution will be paid on or before...
newratings.com  Sep 19  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                19 September 2014 Net Asset Value The unaudited net asset value (NAV) of the ...
newratings.com  Sep 18  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                18 September 2014 Net Asset Value The unaudited net asset value (NAV) of the ...
SeekingAlpha  Sep 16  Comment 
By AdvisorShares: By Heather Rupp, CFA, Director of Research for Peritus Asset Management, the sub-advisory firm of the AdvisorShares Peritus High Yield ETF (NYSEARCA:HYLD) We spoke last week about some of the reasons high yield bonds have...




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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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