Dividend Stocks Are Not The Answer

The WSJ yesterday ran an article exlaining that switching to high dividend stocks is not the same as using bonds in a portfolio. A stock is a stock. You may be getting a 3% dividend yield, but the stock can crash 30%. The movement in the bond's price is constrained by the present value equation and is likely to be limited to a few percent, if that. The dividend strategy has been touted recently as the "solution" to the interest rate risk of intermediate-to-long term bonds. Many yield-starved investors have been drawn to this idea without perhaps realizing the full risk of these "safe" stocks. If yield is your objective, how about shorter maturity bonds with almost no price risk?