I like dividend stocks and I know they have nothing to do with bonds, other then that many if not all of these dividend growthogd wrote:Re: popularity. Those who like dividends most seem to believe that the dividend stock is like a combination stock + bond of sorts. But this is not true -- the dividend comes from the earnings of the company, payments are the first thing to get suspended when it gets into trouble, and even if the next payment is made but the future looks horrendous, the penalty to the stock price will more than "compensate" for having received that last good-times payment.
It's also worth remembering that perpetual bonds would be horribly volatile -- a move from 1% to 2% (akin to a company "falling behind" the rest of the market's earnings) would cost a perpetual bond 50% of its value! Having an expiration date, often short, is a big part of the stability of bonds. With stocks, the stock price keeps you bound to the long term future of the company, indefinitely.
Then there is the argument that dividends indicate/enforce good executive stewardship, but this doesn't seem to help in practice, or dividend companies would consistently fare better. Besides, insisting on 3% of your money being handled just-so ("real", "not fake-able", "not spent on fluff") while happily leaving 97% in the hands of the very same team seems like a strange concept to me. You gotta ultimately trust these guys (in aggregate) because it's the only known way to grow your wealth at a respectable rate.
companies deal with and support the bond market!