There's a good reason that investors love high yielding dividend stocks. Not only does a dividend help buffer against downside risk, it also provides a steady base of returns over time that compounded, can add up to higher growth than you might expect.
Usually investors think of dividend paying stocks as large behemoths that simply don't have the ability to grow like it's smaller, younger competitors. It's a myth that's led many investors away from solid opportunities. These large entities might grow at a slower rate than you want, but when you factor in the dividends and the small downside risk these companies tend to have, you could find an investment that matches any high-risk small cap growth stock without having to expose yourself to unnecessary risk.
For a good example, all we need to do is look at Johnson & Johnson's (JNJ) stock.
Chart courtesy of StockCharts.com
If you bought 100 shares 10 years ago and reinvested all dividends, your holdings would have grown nearly 140%. And if you take a look at it's performance over that time, you'll see it's a very low-risk stock that was easily able to weather the 2008 financial crisis essentially making it a growth stock without the high growth risk. [Read more...]