In a recent Penny Stock Detectives article, editor Danny Esposito argues that, when the Federal Reserve announced it was keeping interest rates at almost zero at least until the end of 2014, this ensured that interest rates at banks for term deposits were going to return almost zero. Esposito believes that, with corporations unwilling to invest in this uncertain environment and sitting on record amounts of cash, one way to appease shareholders is to pay dividends.
“Investors who once depended on their bank deposits to earn interest income now have to search elsewhere, as interest rates are at near-zero,” noted Esposito. “That search is leading them to dividend stocks. Investors are realizing that dividend stocks are paying out more interest income than the banks.”
This means that increased demand for dividend stocks should help the shares of these dividend stocks rise, believes Esposito. Not only are investors earning interest income from these dividend stocks, but they are also earning capital gains, as investor sentiment is moving strongly in their favor.
The other positive to note is that corporations that become dividend stocks tend to have a solid market share within their industry, in Esposito’s opinion. In other words, they wouldn’t pay dividends on a regular basis unless they were confident of the revenue stream that their business is generating.
According to Esposito, investors will also be happy to know that studies have been conducted on dividend stocks. It has been found that, during a downturn in the market, solid dividend stocks went down less than the rest of the market, making dividend stocks even more attractive.
With banks paying little interest income, it is time to look at dividend stocks that offer investors more interest income than banks, believes Esposito. In addition, an investor can own a piece of a solid business that can produce capital gains as well over the long term.
Published every business day, Penny Stock Detectives researches and analyzes low-priced opportunities in the stock market and individual stock market sectors. Penny Stock Detectives reports on penny stocks, small-cap stocks, micro-cap stocks, high-profit potential plays mostly under $10, and the stock market in general.
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The editors of Penny Stock Detectives believe low-priced stocks, when researched properly, present investors with great opportunities to accumulate wealth and to increase the value of their investment portfolios. You can learn more about Penny Stock Detectives at www.pennystockdetectives.com.
Sasha Cekerevac, BA, and Danny Esposito, B. Comm., lead editorial stock analysts at Penny Stock Detectives, in conjunction with stock market guru George Leong, B. Comm., have just updated their breakthrough video, If You Missed Apple, Shame on Us; If You Miss This…which highlights a company these stock analysts believe looks very similar to Apple Inc. in its early days. To see the video, visit: http://www.pennystockdetectives.com/video/pt/index.php?sb=PRESS.