​By Robb Lovell, MBA

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Dividend stocks and funds are always an important part of any conservative portfolio.  But especially right now as we face markets that are relatively flat along with interest rates which are quite low, dividends can become an important and consistent source of returns in a portfolio.



Dividends are a cash payment to shareholders; these are most often paid on a quarterly basis.  These dividends are paid regardless if the stock is held as an individual holding or as part of a mutual or segregated fund.



Dividend stocks and funds offer important consistent return on an investment in times like now where markets are flat.

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It’s important to include dividend stocks and funds in a portfolio as they offer numerous advantages including:



Attractive Returns:   Dividends paid are part of the total return on a stock or fund.  Companies that pay dividends are usually historically stable.



Less Volatility:   Dividends help lessen the potential fall in a company’s stock price, thereby reducing volatility.

Increased Yield:   Dividends provide consistent income and are a small but important part of an investment’s total return.



Favourable Tax Treatment:  Canadian dividends receive a more favourable tax treatment than interest income which is taxed at your full marginal tax rates.

With most funds like segregated funds, dividends are reinvested back into the fund allowing investors to reinvest their dividend earnings.