Dividend paying stocks present an unusual investment situation. With the exception of REITs, utilities companies, certain energy producers and a few other specialized (and usually heavily regulated) industries, most usually don’t provide a yield that’s enough to attract income-seeking investors. In fact, you’re usually better off buying the bonds of a dividend paying company instead of buying its stock if current income is really what you want. At the same time, paying dividends is usually taken as a signal that a company’s growth prospects are not what they once were. After all, why would a company return cash to their shareholders if there are better uses for that cash elsewhere?
|