Investing in dividend-paying stocks definitely has its advantages. After all, stocks with high-dividend yields generally offer more downside risk protection than growth stocks, but of course they offer much less protection than CDs. However, the cash payout these stocks provide gives investors some peace of mind when the going gets rough. So, dividend-paying stocks typically do not fall as fast or as far as high-flying growth stocks (that typically lack a regular dividend payout) when the market turns south.
But it is important to note that a regular dividend will only help to keep a stock’s price stable as long as the dividend payment continues. If a company decides to decrease its regular dividend amount, or cease it altogether, a stock that was once considered a solid dividend stock can easily take a nasty tumble. So, if you are looking to beef up your portfolio with some dividend stocks, usually the best place to start hunting is with stocks that have consistently paid out increasing dividends over a period of years.