Dividend Investing

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Dividend Growth Investor  Jul 26  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...
Forbes  Jul 25  Comment 
In my 20 years of managing high yield bond investments, I’ve never seen so many signals that scream caution.  Desperate to find yield, investors have poured billions into high yield bond funds and ETFs driving the yield on the Barclays High...
newratings.com  Jul 25  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                25 July 2014 Net Asset Value The unaudited net asset value (NAV) of the Company is...
newratings.com  Jul 24  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                24 July 2014 Net Asset Value The unaudited net asset value (NAV) of the Company is...
SeekingAlpha  Jul 24  Comment 
Hickey and Walters (Bespoke) submit: One area of the financial markets that we constantly monitor for signs of confirmation or divergence in the trend for equities are spreads between interest rates on high yield debt and comparable...
newratings.com  Jul 23  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                23 July 2014 Net Asset Value The unaudited net asset value (NAV) of the Company is...
newratings.com  Jul 22  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                22 July 2014 Net Asset Value The unaudited net asset value (NAV) of the Company is...
newratings.com  Jul 22  Comment 
NEW CITY HIGH YIELD FUND LIMITED NOTICE OF ENTRY INTO ARRANGEMENTS WITH SERVICE PROVIDERS TO ENSURE COMPLIANCE WITH THE ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (2011/61/EU)("AIFMD") New City High Yield Fund Limited (the "Company")...
DailyFinance  Jul 21  Comment 
The Trustees of The Putnam Funds declared the following distributions.       FUND NAME AND DISTRIBUTIONSRECORDDATEPAYMENTDATE Putnam High Yield Advantage Fund - Class B Shares (PHYBX) $0.0230 per share investment...
newratings.com  Jul 21  Comment 
To:                   THOMSON REUTERS From:               New City High Yield Fund Limited Date:                21 July 2014 Net Asset Value The unaudited net asset value (NAV) of the Company is...




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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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