Why do Fools fall in love…with dividend stocks?
When you can have a roaring fast growers running with 20%, 25%, even 30% earnings growth, why even give slower stocks any of your attention?
Growth is everything, right?
First of all, investing is not a 100m sprint race. It's a life-long marathon for as long as you plan to invest (and hopefully that is life-long, for your sake).
We can't predict the future, which is why we have insurance for many parts of our lives- house, car, income protection, etc. Like I tell my boys, "you only need a lifesaver when you're drowning."
And that's where lovely dividend stocks shine. When markets are going flat or heading downward, it's the bullet-proof, Teflon-coated, quality dividend stock that saves your portfolio returns. Fools know this well and always have a buffer of blue-chip and high-yield stocks.
What do dividends do for you?
- give you steady income
- you can use that income for company dividend reinvestment schemes that can offer share purchases at a discount
- they turn on the power of compounding to earn interest on interest over many years
These two high-yield stocks could give you that protective buffer and help secure income for your future.
— Woodside Petroleum Limited (ASX: WPL)
The energy giant is getting buffeted by low world oil prices like the rest of the oil and gas companies. Yet the others aren't paying an enormous 6.9% fully franked yield. Thanks to its deep pockets, it is actually in acquisition mode, so falling oil prices could actually help it pick up energy assets at discount prices. It is close to possibly buying stakes in the Gorgon and Wheatstone LNG projects from US-based Apache Corporation (NYSE: APA). This is because Apache wants to stick to its US shale oil business now. This stock could be a good mid and long-term investment.
— Westpac Banking Corp (ASX: WBC)
Although Westpac doesn't pay the highest yield among the big four banks, it has the best record for growing dividend payments the most over the past ten years. Currently, it is paying a very juicy 5.6% yield fully franked. It and the other big banks may not be at bargain prices, but I'm considering it more for that fact that Westpac will be in business paying dividends for decades to come. That could mean a lot of compounding dividend income will be yours for your retirement portfolio.
