Dividend-paying stocks and shares are what most investors want. It is as a result of the market. Most don’t put their money in the financial institution right now. That is because record-low interest rates make it so it is not worth it. Despite a sputtering economic recovery, companies sitting on huge piles of cash can afford nice dividend payouts. The number of businesses paying a lot more in dividends than the average bond yield is at a 15-year high. Dividends get a small tax rate. Dividend-paying stocks can provide a revenue stream and serve as a hedge against inflation. The only problem with the dividend-paying stocks and shares is that they’re protected with Bush tax cuts. If those go, so will the popularity of dividend-paying stocks. Post resource – Why more investors are buying d! ividend-paying stocks, not bonds by Personal Money Store.
Every person hopes to get a dividend-paying stock
Dividend-paying stocks are hot right now as a result of a number of factors. Historically, bond yields far outstrip that of stock dividends. But more United States stocks and shares are paying much more than bonds than at any time in at least 15 years, as outlined by Bloomberg. Companies raised payouts by 6.8 percent in the second quarter. Many corporations have much more money as a result of increased worker productivity. Dividend-paying stocks are cheap, thanks to record-low rates of interest, a projected growth in profits of 36 percent in 2010 — the fastest pace in two decades — and a slowing economy. A 10 percent drop within the S and P 500 since April also pushed up dividend yields relative to share price. Numerous investors are just excited to be able to buy stock that will pay them back more than bonds.
Dividend-paying stocks popularity increase
Individuals are really interested in stock dividends as a hedge against inflation. Linda Stern at ABC News explained this. During a recession, if stock prices go down and bonds lose value, investors can always casha dividend check. There’s an additional perk to dividends. Dividends follow inflation usually. There is still some risk. These come with dividend-paying stocks. Stern uses the example of Financial institution of America and Citicorp. They were two of the corporations who had dividend disappear throughout the credit crunch. Plus, if the Bush tax cuts are allowed to expire on Dec. 31, dividends could again be taxed like ordinary income — at rates up to 39.6 percent. There is a 15 percent tax on capital gains. Dividends share that rate at present.
How to pick dividend-paying stocks
Matt Theal at MarketWatch suggests looking at dividend-paying stocks for investment right now. Investors should invest with any company that pays dividends higher than credit market returns. You will find about 68 S and P 500 companies that have the typical rate within the credit industry since 1995, which is 3.78 percent. Theal wanted to know which S and P 500 businesses to deal with. He looked for a dividend provide of 3.78 percent that sold under 12 times earnings usually. Bristol-Myers, Reynolds American Inc., Verizon Communications and Excelon Corp were among 25 businesses that came up.
Find more data on this subject
Bloomberg
bloomberg.com/news/2010-09-06/dividends-top-bond-yields-by-most-in-15-years-as-u-s-cash-pile-increases.html
ABC News
abcnews.go.com/Business/wireStory?id=11584528
Marketwatch
marketwatch.com/story/high-dividend-stocks-to-consider-2010-09-08?reflink=MW_news_stmp
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