Dividend stocks lagged the broader market in 2012, as the iShares Dow Jones Select Dividend Index (DVY) returned just 10.8% last year, compared with a 13.4% gains for the SPDR S&P 500 (SPX). In addition, according to a report from Bespoke Investment Group, the decile of highest-yielding stocks in the S&P 500 fell on average during 2012.As we approached the fiscal cliff at the end of last year, one concern was that dividend tax rates would rise. This did happen, but raising the maximum dividend tax rate to 20% from 15% was far from the worst-case scenario. As a result, I believe there are attractive buying opportunities in the universe of dividend-paying stocks. Even with income plays, I like to seek out growth; namely, companies that raise their dividends year-in and year-out.
Dividends Reward Consistency
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