Tax-deferred accounts such as traditional and Roth IRAs are ideal places for income-generating investments such as dividend-paying stocks and bonds. Why? Rather than pay taxes annually on dividends and interest received, IRAs allow your nest egg to grow tax-free, entirely avoiding those annual charges that can put a damper on your retirement funds' returns.
Not every company is slashing its dividend these days. Some of the market's better performers are easing up on their purse strings and sending more money out to their shareholders.
The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.
The conventional wisdom is clear: Bonds are best for people in or near retirement. They provide the desired income and can be much more reliable than stocks. Well... yes and no, if you ask me.
I assume that you, like everyone and his Aunt Audrey, would love to find the next Wal-Mart (NYSE: WMT) -- to dig out the market's most precious small companies. Back in October 1977, Wal-Mart traded at a split- and dividend-adjusted price of $0.05 per share. Today, it trades for around $50. In a little more than 30 years, Wal-Mart has turned a $5,000 investment into $5 million.
"It's the world's greatest company, period."
Â -- Arjun Murti, Goldman Sachs analyst
The past year has been brutal for dividend-focused investors. Companies that not long ago were considered rock-solid dividend plays -- AIG (NYSE: AIG), MBIA (NYSE: MBI), etc. -- are slashing payouts left and right. More companies cut their dividends in the first half of 2009 than in all of 2006 through 2008 combined. (That'd be 400 vs. 382, for the curious.)
Bristol-Myers Squibb (NYSE: BMY) just keeps chugging along.
Not every company is slashing its dividend these days. Some of the market's better performers are easing up on their purse strings, sending more money out to their shareholders.
It's been a scary year for dividend investors.