Dividends Ripe for the Picking

I always enjoy seeing dividend investing articles in the news, especially when the article offers a buying opportunity for dividend investors.

A previous Yahoo Finance article, featuring the iShares Dow Jones Select Dividend ETF (DVY), is an example of just that.

I own shares of DVY for my Roth IRA and I’m not overly worried about the share price lagging the broader market, as the article references.

I am re-investing the dividends from DVY and I am glad to be able to buy more shares with my dividend payouts during my accumulation phase (the time between now and when I begin to need the funds for income).

At some point, investors will be seeking more income producing stocks and we will be there to cash in as the demand for dividend stocks and therefore the Dividend ETFs rise.  I have previously written about my thoughts on why we should buy dividend stocks now.

I believe that it will be in the not too distant future when the baby boomer generation will be seeking to add dividend growth stocks to their portfolio in order to hedge their retirement funds against inflation.  This generation is living longer than expected and cannot survive on just bonds that offer no chance for capital growth or inflation hedged income.

So, when you see articles that mention lagging dividend stocks or dividend ETFs, let that be a buy signal and not a signal to jump ship and chase performance.  I’ve tried chasing performance and it seems that when I did, I was always late for the party.

Buy stocks and ETFs that increase their dividends and start your own party!

Disclosure: Long DVY

Comments

[karchad]

I'm long DVY and have been buying during this underperformance. Besides the increasing dividend %, obviously it's a great long-term buy at these prices. Only the very short-sighted would point to temporary underperformance as a reason not to buy

[Old Bull]

What you say is largely true. But high dividend stocks are not the only way for retirees to preserve capital. If they are wise they also keep some diversification in pure growth stocks. So don't automatically expect spectacular rises in high dividend/low growth stocks. As a retiree I favor stocks like GE and strong banks like WFC (now very cheap) that provide me with growth AND a good dividend. Win...win!

[fxtrader07]

I always wonder how people can come up with statements like "strong banks like WFC". I mean, apart from the fact that W. Buffet has a large stake in wfc (which might indicate that it's a good bank stock to own) how can people like you and me KNOW whether a bank is strong or not? Almost anything can be hidden and masked in a bank#s balance sheet - so HOW will any non-insider know what exactly the risks and vulnerabilities of a bank are?
I am not saying that wfc is not a good investment, it may well be. I am saying though, that I suspect that statement of "a strong bank like wfc" might be shallow hope and belief - but not based on facts and knowledge.
apart from that stocks that pay high and well covered dividends are set to outperform the market by a wide margin over the coming years. Growth stock may do well but I see a quite high probability that they may get virtually killed over the coming 5-10 years. just my humble 0.02 of course

[granger]

I swapped my DVY partially into AOD back in January. I am holding both now.

[woody]

I'm not familiar with DVY but will look it up. I like high yielding dividend stocks but belive the dividends must be justified by good earnings and growth