7 Myths About Dividend-Paying Stocks

These investments may not offer the diversification you're looking for.

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Myth No. 1: Dividends hold up in bad markets.

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There is a perception that dividend-paying stocks will hold up better when the market declines. But General Electric paid a quarterly dividend of $0.31 per share in 2008. In 2009, during the global recession, GE cut its dividend to $0.10, commencing in the second quarter of 2009. It was not alone. In 2009, a whopping 57 percent of dividend-paying companies either reduced their dividends or eliminated them altogether.

Next: Myth No. 2: Dividend-paying stocks outperform the market.

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