Investing in dividend paying stocks gives investors many advantages and adds flexibility to a portfolio. With the level of uncertainty in bond rates, fixed income investments are becoming an investment risk, as increasing rates result in a lower bond value. With dividend paying stocks, a high yield can be obtained without any risks of interest rates associated with fixed income securities. In addition, there is more favorable tax treatment versus interest income with certain dividend payouts.

Dividend-paying companies also tend to have healthier balance sheets, with management eager to maintain dividend payouts to attract new investors.

In general, dividend paying stocks tend to offer more attractive returns and less volatility than their non dividend paying counterparts.