Should You Buy High Dividend Stocks?

According to the search engine terms that drive people to this site, one of the most common questions is about whether someone should purchase the common stocks of companies with a high dividend yield. It’s a good question: buying, holding, and reinvesting the dividends from high-yielders like BP and Royal Dutch Shell has been one of the best ways to build long-term wealth over the past twenty, thirty, and forty years, and studies of what happens when dividends are allowed to build on themselves undisturbed for long periods of time is the reason why people like Wharton Professor Jeremy Siegel point out that the old Philip Morris was the absolute best investment you could have made over the course of 1926 to 2006 (among your options that existed in 1926).

But the question is incomplete without considering the company that is paying out the dividends. High-yield dividend investing is only … Read the rest of this article!