A Retirement Portfolio with Staying Power

Here's a piece from Yahoo extolling the benefits of buying stocks that pay high dividends. Here's the idea as well as the philosophy behind it:

Here's an option that might work for a good chunk of your retirement portfolio: It involves higher-dividend-paying stocks and REITs.

Apart from the dividends they yield, the payouts often indicate that the companies are generally making money and are legit (although not always). Moreover, long-term, careful studies show that over lengthy periods, high-dividend stocks have better total return than either low or no dividend stocks, or the broad market generally.

The author then details a little experiment that shows how profitable high dividend-yielding stocks can be:

What Phil found (in very rough terms) is that only in one case out of 10,000 would you run out of money before the 30 years was up -- and that was in the 29th year. In the average case, the portfolio after 30 years would have been 16 times what you started with! That would be good news indeed for your children and grandchildren. And it shows that portfolio would have grown so much that a fixed percentage of it would easily keep up with inflation.

Here's the bottom line:

The beauty of the high-dividend portfolio is simply this: You get to have your cake and eat it, too. You get excellent returns, plus a lot of money at the end of your life.

One thing to note, the information above assumes you're investing in a tax-deferred account. If it's not in one, taxes will eat up a lot of your return.

As I'm rebalancing my portfolio over the next month or so, I'm going to keep this strategy in mind. I have a few high dividend-yielding stocks in my portfolio now -- maybe I need more.