The case for dividend stocks

The search is still on for people looking for income. As this crazy, super slow growth, economy trudges on and interest rates stay at record lows, more and more people are throwing in the towel at FDIC insured CD's and money market accounts. With yields generally less than 2% on CD's and less than 1% on money markets, these types of accounts don't pay enough to pay the bills for those that rely on the income they produce. While bonds are a good alternative for many conservative investors, the media is playing up the possibility of a bond bubble so much that some people might be scared off from purchasing these types of fixed income investments. This leaves dividend stocks as another possible solution for folks who are looking for higher yields. Obviously, people know that the stock market presents a higher level of risk, because your principle is not protected. But with that, the reward is higher yields and the possibility for growth as well. We're not talking about start up companies here. We're talking about well established, very mature, blue chip companies with long track records to back them up. Let's look at a few examples. McDonald's, the fast food restaurant (ticker symbol is MCD), pays a 3% dividend. This company is prospering very well in this low budget economy as people still need to eat and kids love chicken McNuggets. Besides the dividend, this company's stock is up 17% year to date! Not too shabby. Want more than a 3% dividend? How about Du Pont, the chemical company and major competitor to Monsanto (ticker symbol is DD). This stock pays a 4% dividend and has grown over 21% year to date! Looking for 6% income? How about Altria, you might know it better by it's former name, Philip Morris. This tobacco company stock pays a 6.35% dividend and has been one of the best stocks you could have owned in the past 40 or 50 years. This stock is up over 13% year to date. Get the point? Don't believe the hype about losing your shirt in the stock market. If you do your research, buy stocks of solid companies with good track records and who are involved in businesses you can understand, you can make some money. Low interest rates are going to be around for a long time. Is 2% going to get you where you need to go?