High Dividend Stocks

In follow up to my posting a little while back on the subject of Dividends and Investing I thought tonight's Nightly Business Report show on PBS worth mentioning.

Paul interviewed a man who gave five high dividend stocks for consideration. The interview is available on the NBR website here. I don't know how long the link will be valid, so I'll list the symbols in no particular order: DFR, PSEC, NAT, DHT, and HTGC. Each of these stocks pay a dividend of 8 to 10%!

Beware: Made in China

First they poisoned the pet food. then there was the tooth paste scare (complete with counter fit Colgate), and now there is the Thomas recall for use of lead paints. China is operating in a world like that of the US at the time The Jungle was written, before the creation of the Food and Drug Administration.

Remember when buying products made in China, buyer beware.

Dividends and Investing

I was recently reading through the share holder guide from the Royce Funds and came across a fact that was pretty interesting. If your tax rate is 15% or below, then the tax rate for you on dividends in 5%, and capital gains are 5%. Grant many people in that tax rate range won't have much free money to invest, but some will, and it would really be worth cutting back on the cell phone plan or cable TV to come up with $50 to $100 a month to invest.

Traditionally one of the best ways to invest if you don't have much money is through a Dividend ReInvestment Plan (DRIP).

Thanks to the internet there are many discount broker's that offer low fees stock transactions. Reducing your fees is a big part of the challenge when investing small amounts of money. Browsing around Yahoo Finance will show you multiple ads for various online stock brokerage companies. A recent search using the Yahoo stock screen produced a list of 1003 companies paying a dividend higher than 4%. Search for one you are comfortable will not suffer major problems and the dividend return could be much better than putting the money in a savings account.

Another way to minimize your cost of investing is to choose a mutual fund. Find a fund that produces income from investing in dividend paying stocks, sometimes called an Equity Income fund. (Examples: T. Rowe Price Tax-Efficient Growth & Vanguard Equity-Income)