Originally Posted by BuckeyeRed27
Dividend paying stocks tend to be "safer" in terms of stocks, but are still risky as an asset class. I've seen way to many people get lulled into a sense of security because of dividends. People tend to over do it from a diversification stand point as well.
Nothing is "safe" in terms of investing. My first two stocks that I bought were UPS and Bank of America. At the time BAC paid a 5-6% dividend and was a nice stock. Then the financial crisis hit and the dividend went from $.60 per quarter to $.01 and it went from $60 to $4. The banking sector used to be a great place for yield, not its a great place for pretty much nothing.
Barring a bubble pop, which catches pretty much everyone with their pants down, I still think quality dividend stocks are a "safer" investment, especially with bonds in a bubble and interest rates savings accounts near 0. The two things that I like about dividends is it makes a stock difficult to short. You don't want to be shorting the stock but also paying a dividend. Also if the market goes down, you are still getting paid as long as you hold the stock. They aren't guaranteed but there are many companies out there who hold a dividend and increasing dividend important.