Replies to post #136378 on Biotech Values

[Biowatch]

"Why Dividend Stocks Aren't the New Bonds"

Weren't we just discussing a similar point?!?

Albeit preferred's are different from regular dividend paying stocks. (e.g, Washington Mutual, which went to near zero value after chopping dividends.) Preferred are closer to bonds than regular stocks, unless the parent company fails, IMHO.

(Preferred stocks may pay higher yields, and provide a set, steady income, but their value can be chopped in half by inflation, and have a cap where the company can "call" them away.)

Chopping dividends is a shock for seniors on fixed incomes.

Watched the shock on a widow's face in the '70's when "widows and orphans" stocks (aka blue chips) slashed their dividends.

When you're too old to go back to work, and have other family members to take care of, it's a real blow to watch an income stream go down the drain.

After all, they already paid taxes on the income it took to buy stocks, and were frugal enough to save it foe a rainy day. For people who grew up in the Great Depression, or there children, saving money and spending it wisely was a big deal.

http://online.wsj.com/article/SB10001424052970204542404577158761922787578.html

FEBRUARY 6, 2012
Why Dividend Stocks Aren't the New Bonds
You can get generous yields… but also considerable risk

By MICHAEL A. POLLOCK

For many investors who crave steady income, bonds don't look as good as they used to.

With U.S. Treasury yields languishing near historic lows, some people believe they've found a great alternative: dividend-paying stocks or dividend-focused mutual funds.

Many investment pros say it can be a reasonable move for at least part of an income-oriented portfolio. But they caution that investors need to understand the risks. The most basic concern: Equities don't behave the way bonds do, and investors face a much greater chance of capital losses with stocks and stock funds...