Keep the Dividends Flowing: Screening for DRPs
by Wayne A. Thorp
Dividend-paying stocks are usually classified as conservative stocks, at least compared to highly volatile growth stocks. Dividend income provides a steady source of return, and no longer suffers from a tax rate disadvantage.
Also, investing in companies with dividend reinvestment plans (DRPs) offers a conservative low-cost approach, since dividend payments are put to work immediately with little or no transaction costs involved. [For more on the basics of DRPs, see our annual guide.]
However, selecting stocks from a universe that consists only of conservative stocksfirms offering dividend reinvestment plansis not a conservative approach, and can quickly land you into trouble.
...To continue reading this article you must be registered with AAII.
Already registered with AAII? Login to read the rest of this article.
to read this article and receive access to future AAII.com articles.