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Investing In The Age Of The Frugal American
By: Covestor.com   Friday, February 24, 2012 12:43 PM
Symbols: AAPL, MSFT
Microsoft raised its dividend by a full 25% last year, and more increases are expected in 2012.

A better example might be that of "sin stocks." Unlike Apple and Microsoft, which still have robust and growing demand for their products, American tobacco firms have faced slowing demand for their products for decades. But with no need to spend cash on investment and no need to advertise, tobacco stocks have still proven to be fantastic investments, in large part due to their rock-solid dividends.

I consider dividends to be the key to profitable investing in the years ahead. There will be periods when speculative growth stocks are more attractive, and we happen to be in one this quarter (see "Sin Stocks Trail Their More Virtuous Peers " as an example). But for the core of your portfolio, stable, dividend-paying stocks are an attractive option in a world of slow growth and extremely low bond yields.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.


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