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3 Reasons Why Dividends Rock

By Chuck Saletta - Mar 7, 2014 at 6:03PM

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Direct cash rewards, enforced corporate discipline, and a clearer story than you're likely to get from management.

As an investor, you're looking for a sufficient potential return on stocks to justify the risks you take by investing. In the brief video below, Fool contributor Chuck Saletta shares three reasons why you should think about dividends as an important part of that return.

Here are three examples he'll describe:

  • Annaly Capital Management ( NLY -1.48% ) showcases the benefit of dividends as a direct cash reward for the risks investors take in owning a company's stock.
  • Kinder Morgan ( KMI -1.23% ) illustrates how dividends can enforce discipline on a company's leadership.
  • General Electric ( GE -2.10% ) provides an example of how dividends often tell a clearer story of what's really going on than you'll hear from a company's management.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
GE
$93.00 (-2.10%) $-1.99
Annaly Capital Management, Inc. Stock Quote
Annaly Capital Management, Inc.
NLY
$7.98 (-1.48%) $0.12
Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
KMI
$15.27 (-1.23%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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