Market Overview

Stocks that Pay Dividends are The Great Equalizers for Income Disparity

Stocks that Pay Dividends are The Great Equalizers for Income Disparity

The Obama Administration is focusing the efforts of its second term on income inequality in the United States. Although Wall Street is associated with being the province of the wealthy, there is no place that any individual is treated more equitably than as a shareholder of a publicly-traded company.

That is especially so for those that have strong histories of paying dividends to shareholders such as Coca-Cola (NYSE: KO), AT&T (NYSE: T), and McDonald's (NYSE: MCD).

According to investing legend Peter Lynch, the average person has a huge advantage over Wall Street in that they know what is selling well in the neighborhood. As proof of that, all one has to do is read about hedge fund billionaires, such as Bill Ackman's Pershing Square Capital Management losing heavily as a result of recently investing in JC Penney, the failing department store.

By contrast, Warren Buffett, considered by many to be the greatest investor ever, has done very well buying shares of Coca-Cola, Wal-Mart, Exxon Mobil, and other companies that operate locally.

Related: 3 Reasons a Family Office Should Own Shares of Kimberly-Clark

As a result, it is very easy to see those businesses doing well wherever a person lives.

After seeing that what the company has to offer is selling well, more information can be gained for free. There are many financial websites that provide the needed information about publicly-traded companies. All firms worth investing in have websites with even more data.

If an individual does not own a computer, one can be used for free at the local library. There are also many personal finance magazines and books that can be used for free at a public library. The staff there is more than willing to help.

All of these companies mentioned in this article pay dividends to shareholders. When that happens, the management of the company is clearly demonstrating that it respects the rights of minority owners, even if only one share is owned. The money earned by the company is split equally with all who own the common stock, even if it is just one share in an individual's portfolio.

The best way for income inequality to be leveled is through investing in publicly-traded companies. Anyone can see what products are selling well at the local mall. When a company pays a dividend, all those owning shares of the common stock are treated equally. That is the best way of distributing the wealth in a free market society.

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