Wednesday, May 09, 2007

Baby Boomers Attracted To Dividend Funds

A recent article in the Wall Street Journal notes baby boomers have an increased interest in dividend focused mutual funds/investments.
"During the late 1990s, many individual investors were consumed with the capital appreciation of technology stocks that soared to record prices. After the bubble burst and a bear market took hold, many baby boomers facing retirement got spooked when their savings plummeted in value. They sought out investments that could provide extra income and weather stormy markets, leading them to rediscover the power of dividends..."

"Recent data indicate it was a smart shift. According to a Morgan Stanley report, stocks that paid dividends returned an average annual 10.2% from 1970 through 2005, almost six percentage points ahead of nonpayers. And dividend-paying stocks provide some protection in a down market, says John Gould, co-manager of Cullen High Dividend Equity Fund, an important attribute given the possibility that the market soon might slip after nearly five years of gains."
As the baby boomers move closer to retirement, they may continue to pursue dividend focused equities. A post I wrote last month contains more detail on baby boomer's potential future investment strategies.

Dividend Funds Enjoy a Boom, Helped by Aging Baby Boomers ($)
The Wall Street Journal
By: Rob Wherry
May 7, 2007