By James K. Glassman
From Kiplinger’s Personal Finance
Well-chosen stocks that pay dividends are solid investments. They are a little less volatile, or risky, than the market as a whole. They produce slightly worse returns in good times but significantly better returns in bad.
And dividends don’t lie. Companies can pull all sorts of shenanigans to make their earnings look good in the short term, like pushing expenses into future years. Dividends are real cash sent to shareholders.
Consider “Dividend Aristocrats.” These are large companies in the S&P 500 that have increased their payouts each year for at least the past 25. Currently, there are more than 60 such stocks that compose the S&P Dividend Aristocrats index, which gives equal weight to each. You can buy the index through ProShares S&P 500 Dividend Aristocrats, a diverse exchange-traded fund. By sector, the list of Dividend Aristocrats isn’t much different from the market as a whole—with two exceptions. The Aristocrats are light on technology and heavy on consumer-staples stocks….