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The Sunday Times recently published two articles on the above topic. The articles were well written and balanced but one of the heading did not reflect the points made by the article. A person who simply glanced through the newspaper’s heading may think the articles were advocating investing in dividend stocks.
In my field of work, I’ve come across numerous investors who invested based on dividend play. When I asked them how they value these stocks, they had no clue. Apparently they invest based on what they see from blogs and newspaper. Therefore, the mass media plays a very important role in financial education. I personally am against using one’s entire portfolio to invest using the dividend play. In fact, under the best practice portfolio management, dividend yield is not a critical part of the equation. Instead, risk and after-tax and after-expense total return are the most important element.