In today’s low interest rate environment, dividend paying stocks can provide income significantly higher than fixed income investments albeit with the higher volatility that come with owning equities. If you can handle the higher volatility, this might be a good time to beef up your portfolio with these stocks. Aside from the cash flow they provide an investor, having to pay regular dividends imposes a discipline on managements since they don’t like to reduce or eliminate their dividends. Dividends also tend to provide resistance to downward price movements as a decreasing price increases the dividend yield, attracting more investors. Finally once you have received the dividends, future management decisions can’t claw them back, regardless of any poor decisions they may make. In addition, dividends tend to keep pace with earnings over time, providing an income stream that keeps pace with or exceeds inflation, which only adds to their relative advantage over fixed income investments. Like investing in any stock however, fundamental evaluation of the investment and the price should be the primary determinant of whether or not you actually buy the stock, not the dividend. A stock might have a high dividend because business is bad and their stock price has dropped or it might indicate that investors are anticipating a dividend reduction for any number of reasons.