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Unformatted text preview: hen you buy high
dividend stocks. Summarizing the pitch: These are stocks that deliver dividends that
are comparable and, in some cases, higher than coupons on bonds. Buy these
stocks and you can count on receiving the dividends for the long term. If the stock
price goes up, it is an added bonus. If it does not, you still earn more in dividends
than you would have earned by investing in bonds. In fact, this story is bolstered by
the fact that many stocks that pay high dividends are safer, larger companies where
the potential risk is low.
q The Pessimist Pitch: “Defensive I nvestments”: T his i s t he pitch that gains
resonance in bear markets. In an environment where investors have seen their equity
portfolios wither as the stock market declines, stocks that pay high dividends offer
solace. Summarizing this argument: Even though these stocks may lose value like
other stocks, investors holding on to them can still count on receiving the dividends.
In fact, during crises, there is a general flight to...
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- Spring '11