Are dividends back in favor?

Business Money
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I’m a dripper and like the stability and added value dividends give our portfolio. I have getting a whole lot of “dividend” news in my email these days.

Is growth dead? I would love to see billions put back into big dividend paying bluechips.

[quote]The Best Way to Rebuild Your Retirement Dreams

Dividend-paying stocks are absolutely the fastest and most reliable way to achieve financial security and independence. Here are five reasons why you should love dividend stocks right now:

They’re beating the market. Standard & Poor’s reports that through November 7, dividend-paying stocks have averaged a 5.29% gain, in contrast to a gain of 3.81% for those not paying dividends. In 2004, payers returned 18.35%, vs. 13.65% for non-payers. S&P equity market analyst Howard Silverblatt, quoted in BusinessWeek from February 22, 2005, believes this is just the start of a long cycle during which stocks with dividends outperform those without.
They’re low risk. Since the companies pay out cash, investors are more willing to hold dividend stocks through bear markets. Hence, they don’t fall as far or as quickly as non-dividend stocks. These stocks become a magnet for investors burned by the tech wreck and seeking out security.
They earn much better yields with lower taxes. Thanks to a recent change in the tax law, dividends are now taxed at only 15%. Compare that to interest on your savings, CD, or money market account that is taxed as ordinary income – up to 35%! Standard & Poor’s estimates this change should save investors more than $100 billion through 2008. Much of this will be invested back in dividend stocks.
They help you avoid the Enrons of tomorrow. Dividends don’t lie. For example, between 1997 and 2000, Enron’s “earnings” rose 69% but dividends rose only 9%. That’s a sure sign that something fishy was going on. Paper profits can fool analysts but hard cash can’t be faked.
By reinvesting dividends, you ‘dollar-cost average’ and get the power of compounding automatically. Reinvesting dividends improves your portfolio’s long-term returns by buying more shares when the price is low and by helping your profits earn more profits.
Dividends aren’t just for retirees. They’re for anyone who wants to amass great wealth with low risk. Do you think it’s boring to make great returns – and sleep like a baby at night? I don’t. [/quote]

This was from The Motely Fool. I’ve read elsewhere in the past week or so things signaling a shift back into bluechips.

Thoughts?

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Dividend-paying stocks have been back for several years now, d00d. Where ya bean?

[NYSE:CX - Cemex, Mexican/Latin American Cement Producer
[Non TW stocks

I got a nice more-than-double out of CX (plus a 5% annual yield off what I bought it at), and a near-double off NAT (plus something like a 30% payout in dividends, if I recall – when I first bought the payout was well into double digits percentagewise).

That said, I think these two are past the great days. China is expanding into the cement market (may take a few more years to really affect things), and tanker rates have dropped.

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[quote=“MaPoSquid”]Dividend-paying stocks have been back for several years now, d00d. Where ya bean?

[NYSE:CX - Cemex, Mexican/Latin American Cement Producer
[Non TW stocks

I got a nice more-than-double out of CX (plus a 5% annual yield off what I bought it at), and a near-double off NAT (plus something like a 30% payout in dividends, if I recall – when I first bought the payout was well into double digits percentagewise).

That said, I think these two are past the great days. China is expanding into the cement market (may take a few more years to really affect things), and tanker rates have dropped.[/quote]

Ha…nice try d$$d, but I got into several solid dividend paying stocks in late 2002, when the market ws in the toilet and everything was cheap.

Can you say “Philip Morris?” l$l