Dividend Investing in a Low Interest Rate Environment

Yields on fixed income instruments have been in a decline over the past 30 years. While yields on long term obligations were in the mid to high teens in the early 1980’s due to higher inflation, they have come down quite a bit in the early 2010’s to some of the lowest levels in US history. As a result, certain cash deposits such as Certificates of Deposits or Treasury Bills yield less than half a percent. Investors putting cash in any short-term fixed income instruments are not earning an adequate return on their investment and are also losing purchasing power of their savings because of inflation. As a result many savers have started taking on additional risk by getting into dividend paying stocks.Investing in companies that pay dividends could be rewarding, since it could lead to a rising stream of dividend income, which bonds cannot provide. In addition to... Read more