When you’re constructing a portfolio, should you favor stocks or funds that pay higher-than-average dividends? The appeal is easy to understand: As an investor—particularly when you’re retired—it’s comforting to see hefty dividend payments coming in.
But there is one key reason why I don’t recommend going out of your way to overweight high-dividend stocks: With only a few exceptions, companies that pay high dividends tend to be mature, slower-growing companies. Yes, you want to have a diversified portfolio—including mature companies—but I don’t see a need to include an extra dose of these companies.
