Dividends or No Dividends?
To buy stocks with big dividends, or not to buy, that is the question! The answers on this subject are as manifold as the number of plays written by Shakespeare.
A book that recently came to my attention "Investment Fables" delves into this topic and it serves as a good reminder to why dividends can make a difference.
Then my friends at Motley Fool Income Investor started toying with this "sweet dilemma" and came up with some opinions of their
own that echo my perspective, so allow me to share some of what they shared with me. Their analysis is very instructive for those of us who want to be better "value" investors as well as "growth with income" investors:
"Companies that pay dividends reward investors with both income and potential stock appreciation over time. The dividends received from stocks are usually less than the coupon payments from bonds, but the potential price appreciation is much greater with stocks, thus setting up the classic trade-off between fixed income and equity investments.
"But what if you could capture the best of both worlds -- high-yield income with the appreciation?
"This seemingly anomalous idea is one of the cornerstones of the high-dividend investment strategy. Some companies pay such high dividends that their yield matches or exceeds that of a risk-free bond. Here's a list of some larger companies whose trailing dividend yield exceeds that of the current U.S.
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