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Income Bias - KenBob - 06-28-2014
For me, dividend stocks has the best aspects of both stocks and bonds. I get the inflation compensation ability of stocks while also getting the income typical of bonds.
For my 401K, dividend stock investing is not an option. I minimize my 401K contributions for this reason. I contribute just enough to get the employer contributions, which in my case is bonuses.
For my contributions, I have elected to go with a bond index fund rather than a stock index fund. Stocks have historically had higher returns than bonds, but if I am only looking at stock price rise, I am skeptical this will continue.
Much of the historical growth in stock price has been due to the industrial and information revolution. The United States is now a developed country, so this will naturally slow down. In addition, the aging of the population will put downward pressure on the price of stocks when the retired population tries to sell there stock for living expenses.
I believe that any income producing source will have an increased price in time, so it is imperative to accumulate income producing sources now. Therefore, bonds are more valuable to me than stocks that produce no or little dividends.