How to Be a Picky Dividend Investor

One question that clients and subscribers frequently ask me is "Can I use yield alone to pick the best dividend stocks?" This is an easy question to answer because the answer is all of two letters long: No! This is one of the most valuable lessons from the market meltdown of 2008: An investor can not use yield alone to make investment decisions. Remember the days when Bank of America (BAC), JPMorgan Chase (JPM) and scores of other financial services firms looked like inviting propositions because of their juicy yields? Well, we all know how that story ended. Those juicy yields were packed with sour juice because putting those stocks into your portfolio would have been a return buster. Once those banks (and some other stocks in other sectors) reached what appeared to be "attractive" yields, what followed was anything but attractive. The dividends were slashed and shareholders suffered. Making matters worse, many the dividend offenders from 2008-2009 have yet to restore their payouts to their former glory.... Read more