Dividend-Paying Stocks: A Potential Source of Income

Dividend-Paying Stocks: A Potential Source of Income

February 23, 2021

If you're looking for an investment-income source, you may want to consider adding dividend-paying stocks to your portfolio. They may be especially appealing to retirees or investors who aren't comfortable with a lot of risk.

Going With the Flow

Some companies, such as utilities and financial institutions, pay cash dividends to stockholders on a quarterly basis. These stocks may experience less volatility than stocks that don't pay dividends. When the stock market declines, investors tend to seek out dividend-paying stocks, boosting the stocks' prices.

Dividends may also be appealing because they receive favorable tax treatment. For investors in higher tax brackets, the tax rate they pay on qualified dividend income could be significantly less than the tax rate they pay on other types of ordinary income, such as interest.

Following Your Own Current

Dividend-paying stocks are an investment option even if you're not looking for income. You can reinvest the dividends in additional shares of stock and benefit from compounding. Plus, the value of your stock could go up due to price appreciation. Keep in mind, however, that you must still pay tax annually on dividend income -- even if it's reinvested.1

Don't Get Swept Overboard

Also keep in mind that dividends aren't guaranteed. Choose your dividend-paying stocks carefully since some companies may increase dividends to attract investors if their finances aren't watertight or their image is murky.

Looking at the dividend yield can help you evaluate a stock's dividend-paying history. Of course, just having a high yield doesn't mean the stock is definitely a good investment, and past performance doesn't guarantee future results. The amount of any dividend may vary over time.

Your financial professional can help you determine if a dividend-paying stock is a good fit for your portfolio.

Important Discloure Information

The comments above refer generally to financial markets and not Bazis Young portfolios or any related performance.  The content of this article should not be considered financial advice. The article is not intended to  offer specific investment recommendations and  is general in nature and should not be considered a comprehensive review or analysis of the topics discussed. This article is not a substitute for a consultation with an investment adviser in a one-on-one context whereby all the facts of the attendee’s situation can be considered in its entirety and the investment adviser can provide individualized investment advice or a customized financial plan.  Opinions expressed are current as of the date shown and are subject to change.  Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss.  All investments carry some level of risk including loss of principal. Information or data shown or used in this material was received from sources believed to be reliable, but accuracy is not guaranteed. This information does not provide recipients with information or advice that is sufficient on which to base an investment decision. This information does not consider the specific investment objectives, financial situation or need of any particular investor and may not be suitable for all types of investors. Recipients should consider the content of this information as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.


Bāzis Young Investment Group, LLC is a registered investment adviser with the Securities and Exchange Commission.  Registration as an investment adviser does not imply any level of skill or expertise. Any discussion of specific securities is provided for information purpose only and should not be deemed as investment advice or a recommendation to buy or sell any individual security mentions or to allocate assets in any manner discussed.