The market has made it so individuals are more considering dividend-paying stocks and shares. Most don’t want to put money within the bank with the record-low interest rates. Numerous companies are sitting on money making it easier to pay dividends. A 15 year high has been reached by businesses. This is for the average bond yield the corporations pay for dividends. Rules on tax rates are special right now. The dividend one is especially low. Safeguarding against inflation is what many want dividend-paying shares for with a revenue stream. If Bush tax cuts end up expiring, dividend-paying stocks will not be wanted anymore.
Everyone hopes to get a dividend-paying stock
You will find a lot of reasons as to why many want dividend-paying stocks. Historically, bond yields far outstrip that of stock dividends. In the last 15 years, there has been a change, explains Bloomberg. U.S. stocks are more profitable than bonds now. There was an increase in payouts in the second quarter. This increase was 6.8 percent. Increasing worker productivity throughout the downturn has made companies cash-rich. Record low rates of interest made it so dividend-paying stocks and shares could possibly be cheap and have a 2010 projected growth of 36 percent. There is another reason dividend yields were pushed so much. It is as a result of the 10 percent drop within the S and P 500. It’s giving investors the chance to buy shares that pay a lot more than bonds, at inexpensive price-to-earnings multiples.
Why dividend-paying stocks are popular
Investors see stock dividends as a safety net in a recession and a hedge against inflation during a recovery as well, according to Linda Stern at ABC News. Numerous think about how dividend checks could be cashed anytime. This helps during a rough economy where bond and shares are losing value. Dividends generally go along with inflation also. There is risk still. Stern uses Bank of The United States and Citicorp stocks and shares, which saw nice dividends disappear through the credit crunch, as an example. Bush tax cuts are planned to expire on December 31 which would mean dividends could possibly be taxed up to 39.6 percent again. Right now, dividend and capital gains are both taxed at 15 percent.
Getting the dividend-paying stock you need
Now is the time to take a look at dividend-paying stocks as a long-term investment, according to Matt Theal at MarketWatch. Theal said investors should watch for companies that pay dividends higher than the return in the credit markets. 3.78 percent has been the average credit industry rate since 1995. 68 S and P 500 have that rate. Theal wanted to know which S and P 500 businesses to deal with. He looked for a dividend provide of 3.78 percent that sold under 12 times earnings usually. Bristol-Myers, Reynolds American Inc., Verizon Communications and Excelon Corp were among 25 companies that came up.
Bloomberg
bloomberg.com/news/2010-09-06/dividends-top-bond-yields-by-most-in-15-years-as-u-s-cash-pile-increases.html
ABC News
abcnews.go.com/Business/wireStory?id=11584528
Marketwatch
marketwatch.com/story/high-dividend-stocks-to-consider-2010-09-08?reflink=MW_news_stmp
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