We are frequently asked about the merits of investing in dividend paying stocks vs. other active strategies or vs. indexing. As the following article suggests, choosing companies based merely on their dividend history and apparently high dividend yields can be risky indeed. Once again, we are reminded that there are no “free lunches” in investing. Pursuing high dividend yields is clearly an attractive strategy for investors to employ; however, it is FUTURE dividends that matter, not prior dividends. As investors this puts us right back at square one, trying to predict a company’s dividend paying prospects subject to the infinite number of variables that can make or break an investment selection.
GM, Motorola, NY Times Burn Cash Flow, Keep Dividends (Update1) By Elizabeth StantonPosted June 3, 2008 by Nathan Gendelman
