3 Reasons to Invest in Dividend-Paying Stocks for Retirement
They may be boring, for retirees and pre-retirees alike. The fact of the matter is, however, that a healthy dose of dividend stocks is what most investors need in their portfolios...even if they don't need income right now. Here are three specific reasons why you may want to make this strategic shift sooner rather than later, even if retirement is years down the road.
Even removing dividend payments from the equation, stocks that dish out regular dividends are historically less volatile (and therefore more dependable) than most growth-oriented stocks. Numbers crunched by Bloomberg L.P., for instance, indicate that the volatility of the S&P 500 Dividend Aristocrats Index is almost always less than the S&P 500's (SNPINDEX: ^GSPC) volatility, while Standard & Poor's has found that its S&P 500 Low Volatility High Dividend Index fared better than the broad market 73% of the time during downturns.
Granted, the index generally underperformed during bullish periods. There's much to be said for knowing you don't have to perfectly time your retirement date to coincide with a strong bull market, though.
Source Fool.com
