This Dividend-Stock Mistake Can Ruin Your Retirement

Dividend stocks are an essential part of retiring with financial security. But many retirees make a very simple and avoidable mistake with their dividend stocks: they choose the highest-yielding stocks available rather than thinking about longer-term prospects for their portfolios. In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at the problems that high-yield dividend stocks can create. He notes that high yields are often unsustainable, with imminent dividend cuts hurting your investments both by cutting your income and suffering share-price declines. Dan gives the example of the Select SPDR Utilities ETF (NYSEMKT: XLU), which has done well this year but could be vulnerable from higher interest rates in the future. Yet Dan also points out that some high-yielding stocks can be promising, discussing the stable cash flow and long-term prospects for telecom giant AT&T (NYSE: T) and cigarette maven Altria Group (NYSE: MO). Dan concludes that you have to look at stocks with consistent track records of rising dividends in order to make the most of your investment income potential. Investing made simple: The Motley Fool's essential guide to investing is now available to the public, free of cost, at http://bit.ly/1atRpHZ. This resource was designed to cover everything that new investors need to know to get started today. For your free copy, just click the link above. Visit us on the web at http://www.fool.com, home to the world's greatest investing community! ------------------------------------------------------------------------ Subscribe to The Motley Fool's YouTube Channel: http://www.youtube.com/TheMotleyFool Or, follow our Google+ page: https://plus.google.com/+MotleyFool/posts Inside The Motley Fool: Check out our Culture Blog! http://culture.fool.com Join our Facebook community: https://www.facebook.com/themotleyfool Follow The Motley Fool on Twitter: https://twitter.com/themotleyfool

Comments

1. what about high yield dividends I.n the short term
2. dude blinked twice the whole video
3. if the dividend is 5%, then it will take about 20 years to get your full return on the stock purchased. Well, not quite, but it's an easy way to figure it out. Obviously if the stock goes up, and you have many shares to sell after several years, then you account for any losses later.
4. Awesome Video!
   
   Do you mind if i post this video on my Steady dividend income Facebook page? Id love to share it ! https://www.facebook.com/SteadyDividendIncome/
5. great video. I wanted to ask do you think dividend investing is even worth it for someone trying to make monthly income for bills?