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Last post 05-05-2008, 7:48 AM by goldovt2005. 2 replies.
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  •  02-01-2008, 9:52 AM 22877

    How Dividend-Paying Stocks Can Help You Tame the Bear

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    Many investors are so scared by the wild gyrations the stock market has seen of late that theyve jettisoned everything - including the kitchen sink - in their search for safety.

    Not only is this a massive mistake from a timing standpoint, its also a major misstep because of all the dividend income those folks are going to forego. Taken together, investors who have embraced this kind of "abandon-ship strategy" will find that theyve dealt themselves a one-two knockout punch that will put their portfolios down for the count.

    Article title: How Dividend-Paying Stocks Can Help You Tame the Bear
    Author: Keith Fitz-Gerald, Investment Director
    Publication: Money Morning/The Money Map Report

    http://www.moneymorning.com/

    Sergean_Major

    Note: I invite all ZeccoShare members to join the High-Yield Investing group!

  •  03-27-2008, 4:09 PM 25838 in reply to 22877

    Re: How Dividend-Paying Stocks Can Help You Tame the Bear

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    I would be extremely careful when investing using solely a dividend yield as an indicator of stability.  For one, retained earnings paid out as divys is money that a company can't reinvest back into the company.  Also one of the points in the article (dividend paying stocks are more stable than non-divy-paying stocks) is a false premise built by someone who's apparently never invested in high-yield stocks.  Understand that if you are investing in high-yield stocks and they aren't a member of a REIT, Canroy or CEF the yield is probably inflated by lack of stock value - which therein threatens the likelihood of continued payout.  Even still, each of these three types has their share of problems.

    REITs of course got screwed by the sub-prime market while losing that key tax advantage of fixed payouts to shareholders in order to create a corporate tax shelter. Canroys are about to lose their tax benefit in 2011, and closed-end funds have been known to pay out stockholder earnings as dividends - making them far too close to Ponzi schemes for my comfort.

    But this doesn't mean dividends aren't attractive investments - finding large-cap, longwithstanding companies in the S&P paying out modest dividends with low payout ratios and a history of raising divy yields is key.  Of course if you have the time you can attempt to capture the dividend gain between the x-divy and payout date, but that's too much work for my efforts.  I'd rather just invest wisely with low-risk companies, structure my investments to capture dividend gains of 0.5-1% every week, re-invest those dividends and hopefully have a solid portfolio that pays out a solid income weekly by the time i retire.

  •  05-05-2008, 7:48 AM 28490 in reply to 25838

    Re: How Dividend-Paying Stocks Can Help You Tame the Bear

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    examples?

    I pick SEH and PVX.

    David
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