The ultra-low interest rate environment in the past few years has led investors to switch from investing in bonds to investing in high dividend paying stocks at an ever fast pace. Furthermore, qualified dividend income, as well as capital gains, is taxed at a lower rate than income tax rate. Second, the volatility (risk) of high-dividend paying stocks is much higher than that of bonds. Investors stand a higher chance of losing and of larger loss investing in high-dividend paying stocks as compared to bonds. See “The Problem With Dividend Stocks” by John Coumarianos on Wall Street Journal on September 15, 2016.

Source: Wall Street Journal December 04, 2016 05:30 UTC