At CAIM we’ve always touted the plusses of dividend paying stocks.
As their name suggests, dividend-paying stocks are stocks that pay you an income stream. It’s a great way to get paid now while waiting for your stocks, as a whole, to grow. Also, the income you receive from dividends is only taxed at 15%. All of this makes these stocks ideal for CAIM clients, women and baby boomers approaching retirement, who want to maximize their investments and maintain a steady stream of income. Dividend paying stocks provide them with the necessary growth to keep up with inflation, as well as a cushion i.e. the quarterly dividend-payment, which helps your portfolio grow even when stocks are out of favor!
A recent Barron’s report called “10 for the Money” supports CAIM’s focus on dividend-paying stocks.
Rollercoaster share prices over the past two years have left many investors understandably anxious and uncertain. Barron’s notes that while there’s plenty of time for the young to make up big stock losses, for anyone who is recently retired, or plans to do it soon, the 2009 rally has merely applied a Band Aid where a tourniquet is more appropriate! Also, with equity prices 30% below their 2007 highs and Americans living longer, chances are high that many folks will outlive their portfolios’ ability to support them.
The solution? Large cap, high quality, dividend-paying and dividend growing stocks proclaims Barron’s!
Over 20 years (the period most retirees are concerned with) dividend stocks often outpace the market on a risk-adjusted basis. They offer stable earnings and you can count on the dividend more than on capital gains or price appreciation. Also, while they don’t rise as much in whiplash rallies like the one we’re in, they also go down less when the market buckles, according to Barron’s.