After finding clarity on the tax debate, investors are returning to dividend-paying stocks and exchange traded funds in search of yield and more conservative strategies for equities.
Interest-bearing accounts like money market fund and short-term deposits are earning less than 1%. Consequently, investors are seeking out dividend-paying stocks to augment their income needs. [Death of Dividend ETFs ‘Greatly Exaggerated’]
“You’re seeing (the idea of) returning value to shareholders being reborn,” Damon Southward, chief market strategist at Briefing.com, said, reports Debbie Carlson for Chicago Tribune.
The rising demand for dividends has not gone unnoticed. Corporate America is beginning to increase dividends, and some are starting to issue dividends for the first time. For instance, Apple (NasdaqGS: AAPL) offered its first dividend last year.
Nevertheless, investors should still know the risks. Different stocks may offer payouts during certain periods of the year. Joe Lucey, president of Secured Retirement Advisors, points out that investors need to consider what’s in their entire portfolio.
“See how they fit in your portfolio,” Lucey said in the report. “This should be money that you put in your long-term investments, money that you don’t need.”