This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dividend Funds Put Money in Your Pocket

Like nearly all equity funds, Thornburg Investment Income Builder (TIBAX) has suffered lately. But many Thornburg shareholders have little cause to be upset because they withdraw dividends from the fund, receiving monthly checks. And in the past year, the checks have increased 11%.

Thornburg's reliability is particularly noteworthy because dozens of companies have cut dividends in recent months. Portfolio manager Brian McMahon has dodged most of the trouble, sticking with solid shares that have continued to increase their dividends.

By picking steady stocks, McMahon has maintained his record for constantly raising dividends. In 2003, the fund paid annual dividends of $0.56 and had a share price of $11.94. Since then, the dividend has increased every year. Now the share price is $13.90, and Thornburg expects to distribute more than $1.00 in dividends for 2008. "Even in the worst market conditions, many companies continue raising dividends," says McMahon.

At a time when most investing approaches have soured, dividend strategies remain intriguing. By buying and holding a portfolio of dividend stocks, retirees and other income investors can obtain a stream of payments that rises over time.

Since stocks collapsed in recent months, dividends have come to seem particularly appealing. When stock prices fall, dividend yields rise. The yield on the S&P 500 is now around 2.9%, up from 1.8% a year ago. Plenty of blue-chip stocks yield more than 4%, and Thornburg yields 5.9%. With yields so high, many retirees can now afford to live strictly on dividends. That is a big change from the conditions of recent years. Beginning in the 1990s, yields fell well below 3%, and only the wealthiest retirees could live on dividends while leaving principal untouched.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $130.16 0.15%
FB $82.47 2.50%
GOOG $540.36 0.22%
TSLA $248.83 0.19%
YHOO $43.21 0.14%

Markets

DOW 18,076.27 +64.33 0.36%
S&P 500 2,114.07 +4.47 0.21%
NASDAQ 5,099.2310 +22.7070 0.45%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs