BONDS VS DIVIDEND STOCKS

Just finished reading an interesting article about investing in bonds versus dividend stock investing.  It made some great points about the current state of the bond market.  Not the least of which is the fact that with current bond rates at all time lows, the bond market yields have nowhere to go but up.  As yields rise, bond prices move lower, eating away any gain from the coupon.


On the other hand, dividend stocks make quarterly or annual cash payments similar to bond payouts, but also have unlimited potential for capital appreciation.  They satisfy the two main concerns of most investors by giving them cash to help with rent, groceries and other expenses, while increasing in value over time, helping to raise the value of your portfolio in the process.

What I found most interesting about the article was, of the five dividend stocks recommended for stability and long term gains, I already hold positions in four of the corporations.  The remaining was an energy limited partnership which I do not own shares in, but I do still have shares in 3 other energy partnerships, so it all works out in the end.

Investors this year have pulled billions of dollars out of the stock market and poured their hard earned cash in to bonds.  With the uncertainty in the market, this is certainly an understandable response.  But I firmly believe that the only way for most of us to achieve a secure and comfortable retirement, is to invest in individual stocks. 

While you won't get rich over night, diverting a good portion of your investment portfolio toward dividend paying stocks, will go a long way towards building wealth and helping you sleep better at night.