cal lows, many investors in recent
years have been looking beyond
Treasuries and other high-quality
bonds to dividend-paying stocks.
But not all dividend-paying stocks
are created equal. And in today's
markets, you might consider focus-
ing on companies that are increas-
ing their dividends.
titative Strategy at BofA
Merrill Lynch Global Re-
search, these stocks have
proved to be resilient during
the volatility of the past sev-
eral years.
panies whose growth years
were behind them. Today,
however, increasing num-
bers of growth-oriented companies,
including technology and service
firms, have started to pay dividends.
The current yields from those pay-
ments are often lower than the
yields investors could get from more
established stocks, but Subraman-
ian says that in terms of total return
potential, these younger companies
might be able to outpace their more
mature counterparts over the long
term. "We've found that companies
with lower current yields but growing
dividends have historically outper-
formed higher-yielding stocks," she
says. And dividend-growing stocks
are currently inexpensive compared
with high-yielding dividend stocks.
that, taken together, may signal that
a company's dividend could be
secure and likely to grow.
company that has seen earnings
jump around," Subramanian says.
Wide swings may indicate that its
profits and the dividends that are
paid out of those earnings could
be threatened during an economic
downturn.
currently distributing to sharehold-
ers. The advantage here goes to
companies that are giving share-
holders a lower percentage. "If a
company is already paying out 90
percent of its earnings, there is no
room for its dividend to go up," Sub-
ramanian notes. Instead, look for
companies with dividends closer to
30 percent of earnings.
that the company will con-
tinue paying dividends.
When the cost of financing
rises, as it did during the
credit crisis of 2008, highly
leveraged companies could
be forced to cut dividends
and redirect those earnings
to debt payments. In 2008
and 2009, more than 100
their dividends.
can be, suppose you bought a stock
when its dividend yield was 3 per-
cent. If the company then increased
its payout by 15 percent each year
for five years, the dividend yield on
your original investment would dou-
ble to 6 percent.
cal average, "companies have the
potential ability to deliver this type of
dividend growth," Subramanian
says.
make sure your investment choices
are suitable to your needs and in
line with your tolerance for risk, your
long-term goals and your liquidity
needs.
may provide some downside pro-
tection which could cushion the
blow when stock prices fall she
also notes that they come with risks.
8520.)
$
700
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and 1980 Country Music Association Vocal Duet of the
Year Award-Winner MOE BANDY has announced that
he will perform two shows in West Ocean City as part
of his tour swing.
years during which time he has recorded 35 albums
that produced over 60 chart hits for him. His career
skyrocketed to stardom in the late '70s and early '80s
with chart-topping hits that included "It's A Cheating
Situation," "Bandy The Rodeo Clown" and "Till I'm Too
Old To Die Young," as well
after "Americana." Since 1992, he has been perform-
ing at his own theater in Branson, Mo. This concert will
feature not only MOE BANDY but his award-winning
"AMERICANA BAND."