If you’re looking for a steady stream of income, with the possibility of growth of your capital invesment, then investing in companies with dividend paying stocks may be the way to go.
Traditionally, utility companies and financial institutions are the top dividend paying companies. Some companies with a history of paying higher dividends include Kraft Foods Inc (KFT), AT&T Inc. (T), Verizon (VZ), Duke Energy (DUK), and Centerpoint Energy (CNP). In 2009 dividends from these companies ranged from 4.27% to 6.3%.
Reasonf for investing in dividend paying stocks include:
- Their performance: According to Hartfod Investor, Dividend-paying stocks outperformed non-dividend paying stocks 22 out of the past 30 calendar years (73% of the time), even in fluctuating markets. Companies that increased or started paying dividends have returned 9.5% yearly on average since 1972.
- Your money can make money: Dividends offer a two-fold benefit. You can re-invest dividends in other stocks to further diversify your portfolio or just add to your assets.
- They soften losses: Historically, during tough economic times their return is reasonably high.
- Potential Growth: According to Seekingalpha.com, dividend stocks in the consumer staples, tobacco and health care sector hold lots of potential growth for the future