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Investors Flock to Dividend Stocks

By    |   Tuesday, 08 April 2014 12:50 PM

Dividend stocks are back in favor amid concerns about the strength of earnings and the economy.

Analysts estimate profits for companies in the S&P 500 dropped 1.2 percent in the first quarter, according to FactSet Research. And many analysts predict that economic growth shrank to under 2 percent in the first quarter from 2.6 percent in the fourth quarter.

"We're giving more weight to dividends, just because we don't really see the engines of [economic] growth there," Scott Armiger, chief investment officer at Christiana Trust, told The Wall Street Journal.

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

"A sustainable dividend puts a floor under the price of the stock."

Among the winners are Caterpillar, Merck and Entergy, the paper notes. All three have gained more than 11 percent this year, compared to a 0.2 percent decline for the S&P 500. Each of the stocks has a dividend yield of at least 2.4 percent.

Many companies are increasing their dividends. Analysts anticipate S&P 500 companies will lift their payouts by 10 percent this year, according to FactSet, The Journal reports.

"It's easier to find good dividend stocks now because companies are accelerating their distribution of cash," Steve Rees, global head of equity strategy for J.P. Morgan Private Bank, told the paper.

Many market professionals recommend choosing companies with a moderate dividend that have a good chance to increase that dividend rather than companies with a high dividend that may have to cut that dividend.

"We think dividend growers are the place to be in such an environment," Scott Moore, a manager of the Buffalo Dividend Focus fund, told The New York Times.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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Dividend stocks are back in favor amid concerns about the strength of earnings and the economy.
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2014-50-08
Tuesday, 08 April 2014 12:50 PM
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