Yet income investors moving from low-yield Treasuries to dividend stocks need to keep in mind they are taking on more risk in their portfolios, since equities are more volatile than bonds.
“Investors should also remember that dividend-paying stocks don’t always behave like other stocks, either,” the Wall Street Journal reports. “Dividend payers are often larger, established companies—which means they often aren’t perceived to have the same potential for earnings and revenue growth as smaller firms. When the rest of the market is booming, dividend payers are often lagging behind the crowd.”
Some claim the early underperformance of dividend ETFs this year is simply the result of portfolio managers pruning 2011’s winners.
“But nothing’s changed, professional investors say. U.S. large-cap stocks that pay a dividend remain as attractive as they have been over the past year,” writes Robert Holmes at The Street.
The Obama administration’s tax proposals include treating dividends as ordinary income for married couples making more than $250,000 a year and individuals making more than $200,000, Bloomberg reports.
Vanguard Dividend Appreciation
