Markets & Economy

4 Reasons Why Retirees May Decide to Invest in Dividend Paying Stocks

4 Reasons Why Retirees May Decide to Invest in Dividend Paying Stocks

For millions of Americans living in retirement, the number one concern is the fear of outliving their retirement savings. The challenge is how to generate income from their savings and investments without depleting principal.

Dividend-paying stocks are a potential way for investors to continue growing their wealth while generating a stream of income. By investing in dividend paying stocks, investors may:

Combat inflation — Unlike bonds, dividend-paying stocks provide an important hedge against inflation because, over time, a company can increase (or decrease) its dividend payments.Generate income in a low yield environment — As bond yields have fallen over the past decade, many traditional sources of investment income have become less attractive.Tap growth potential — Dividend-paying stocks also offer the possibility of capital appreciation over the long term. In fact, dividends can make up a significant portion of total return. Combining yield and growth can enhance returns.Potential Buffer against volatility — Generally, those companies that pay regular dividends are established, with proven records of growth, and tend to be healthier than companies that do not pay dividends. This can be particularly true during market meltdowns: dividend-paying stocks tend to hold up better because of something called yield support, whereby the stock is cushioned by continuing dividend income.

Harness the Power of Stock Dividends

If you’re concerned about the effect of ongoing market volatility on your retirement portfolio, or perhaps are looking for a more competitive source of current income compared to lower-yielding bonds, you may want to consider the Dreyfus Equity Income Fund.

The fund offers growth potential to fund long-term goals, a monthly dividend payout and a conservative approach designed to weather a range of market environments.

Dreyfus Equity Income Fund seeks to provide both growth and current income by investing in the stocks of companies that the fund’s manager believes has stable business models, and the potential to maintain and/or increase dividend payments over time. The fund’s managers look to be invested in all sectors of the market, diversifying assets and providing a core equity strategy for investors. Monthly dividends may be taken to meet income needs, or reinvested to take advantage of the power of compounding — to enhance growth potential while cushioning volatility.

For more information on Dreyfus Equity Income and the power of dividend-paying stocks, call 1-800-DREYFUS (1-800-373-9387).

Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus, or a summary prospectus, if available, that contains this and other information about a fund, and read it carefully before investing.

Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are fully described in the fund’s prospectus. There is no guarantee that dividend-paying companies will continue to pay, or increase, their dividend. Unlike bank CDs that are FDIC-insured, mutual fund shares are not insured by the FDIC or the U.S. government and are subject to risk of principal loss.