The benchmark 10-year Treasury notes yields around 1.67%. The S&P 500 Index yielded 2.25% at the end of August.
Dividend stocks gained 14.4% annually between 1979 through 2002, compared to the 11% return for non-dividend providers.
Only households that earn over $250,000 a year or single filers with more than $200,000 will have to pay the maximum 43.4% tax rate on dividends. Additionally, most dividend-paying assets are in tax-deferred accounts.
“There always seems to be this implication that everybody is going to pay the top marginal rates, and that’s not true,” Josh Peters, editor of investment researcher Morningstar, added. “If the bulk of your retirement funds are in tax-deferred accounts, don’t worry,”
Todd Rosenbluth of S&P Capital IQ offers a few ETF suggestions for those still seeking dividend investments:
- SPDR S&P Dividend (NYSEArca: SDY): 3.14% yield
- iShares Dow Jones Select Dividend Index (NYSEArca: DVY): 3.41% yield
- Vanguard high Dividend Yield Index (NYSEArca: VYM): 2.79% yield
- WisdomTree LargeCap Dividend (NYSEArca: DLN): 2.72% yield
For more information on dividends, visit our dividends ETFs category.
Max Chen contributed to this article.