As Published in the Spring 2014 Edition of NJ Lifestyle
Dividend paying stocks have received a lot of attention over the last few years as interest rates have fallen. With the yield on the 5-year Treasury note dropping below 1%, investors shifted their focus to stocks as prices were down and the yield on the S&P 500 surpassed 2.5%. As of July 2013, nearly 30% of the stocks that make up the S&P 500 Index had dividend yields that surpassed the yield on the 10-year U.S. Treasury. Low fixed income yields coupled with favorable tax treatment on dividend payments and the ability of dividends to help mitigate market volatility have made dividend paying stocks an important component of investor returns for decades, and can be a powerful tool for your portfolio.