Avoiding the Dividend Trap

[idiotstockinvestor]

This article basically makes the case that you have to be careful not to buy stocks just for the dividends. I thought the mainstream media was all about dividends just a few months ago, saying they are proven over time to produce more wealth?

I agree with their merits though, don't look at dividends alone, and if anything see how their dividends changed during the 2008 market crash.

I now keep in mind that dividends are nothing compared to the growth of a stock. A good and stable company means nothing if the stock has become so devalued that you've lost so much and can't sell.

This happened to me with CHL, China Mobile. Their dividends are strong, the company will never go bankrupt, but I've still lost over 20% as the stock crashed shortly after a selloff by Vodafone. If the stock price does not recover quickly, it will take years before I break even.



http://finance.yahoo.com/news/Avoidi...&asset=&ccode=