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Andre Maurois

Investment Dictionary


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Dividend Stocks

 

Dividend stocks are called stocks that have high dividend yield and high dividend payout ratio. Normal dividend stocks should have stable 6%-10% dividend yield and possible 60-100% dividend payout ratio. High dividend paying companies normally are from stable sectors as telecoms, utilities.

 

Dividend stocks are defensive investments and loose value not so quickly when stock market is falling down. But price increases of dividend stocks are also not impressively even if whole market is growing rapidly. 

 

Lower beta of dividend stocks makes them a safer investment and can be useful instrument in investment portfolio. However, significance of dividends is getting lower over time because stock buyback may be more tax friendly way to payout capital for shareholders.

 






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