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1 Winning Dividend Investment for Year's End

Tamara Walsh
December 7, 2013

With just 24 days left in the year, investors are looking to the future. And what better way to kick off 2014 than by adding two high-quality dividend stocks to your portfolio? After all, dividend stocks tend to outperform non-dividend-paying stocks over the long haul. Here's one stock that will reward investors in the year ahead, regardless of volatility in the market.

Reliable payouts are key
Investing for income can be extremely rewarding when you pick the right stocks. However, too often, investors make the mistake of chasing yields. A high-yielding dividend stock such as Windstream (NASDAQ: WIN), for example, looks attractive with a dividend yield north of 12%. However, a closer look reveals a payout ratio of more than 500%. That means Windstream pays out more than 100% of its cash to shareholders.

On top of that, Windstream has a massive net debt load of $8.8 billion, which could weigh down the stock going forward. As a result, it's only a matter of time until Windstream will be forced to slash its dividend or cut it altogether. Fellow Fool Dan Dzombak summed it best when he said, "Investing in Windstream looks like picking up quarters in front of a steamroller; sooner or later you're going to get crushed." 

That's where Apple (NASDAQ: AAPL) comes into play -- it offers investors reliable payouts backed by strong financials.

Apple of your eye
Unlike Windstream, Apple has a reliable payout ratio of just 29%. That said, the tech titan's dividend yield of 2.1% is also well below that of Windstream. However, investors can rest assured that Apple will be able to pay its shareholders for years to come, particularly thanks to the company's massive cash pile. For the quarter ended in September, Apple reported a whopping $147 billion in cash.

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