Why Consider Dividend-paying Stocks?
In an investment environment of lower yields and a sluggish economy that may dampen growth stocks, you may want to consider dividendpaying stocks. Some of these stocks yield around 4% or even more now, which compares favorably with many investment yields. Moreover, dividend payers typically have outperformed other stocks during bear markets. “One study of the 2000-2002 bear market found that dividend-paying stocks outperformed non-dividend payers by 47% on average,” says Tom Lydon, president of Global Trends Investments, Irvine, Calif. “A study that took a longer perspective, from 1970 to 2000, found that dividend-paying stocks outperformed non-dividend payers during down markets by an average of 1.5% per month.” Companies that pay dividends generally take in more cash than they need; these sound firms pay out profits to investors. Overall, they tend to have good long-term prospects. In addition, bear markets often go hand-in-hand with recessions, and many dividend payers are in indust
