In you’re looking for investment income in a low-yield environment, consider dividend-paying stocks. They may be appealing for several reasons:
* Chance for appreciation. Successful companies have a history of raising dividends, year after year. Higher dividends not only mean more cash flow, they also may attract investors and generate higher share prices.
* Low taxes. Most stock dividends are now taxed at only 15 percent. Low-bracket taxpayers owe no tax on stock dividends, through 2010, under current law. This year, that 0 percent rate applies to taxable income under $32,550, or under $65,100 on a joint return.
* Rising yields. As the stock market falls, yields rise, assuming a company maintains its dividend. Among the stocks most widely held by mutual funds, here are those with the highest yields:
Bank of America, 6.2 percent
Pfizer, 5.7 percent
Citigroup, 5.1 percent
AT&T, 4.4 percent
Altria Group, 4.1 percent
General Electric, 3.7 percent
J.P. Morgan Chase, 3.6 percent
Those dividends are by no means guaranteed, in the current economy, but the fact that these stocks are held by many mutual fund managers means that prospects are encouraging to some savvy stock pickers.
