What Investors Need to Know About High-Yield Stocks

If you're like most people, you could use more income. With U.S. salary and wage growth continuing to barely outpace inflation, it's prudent to look for ways to augment your paychecks.

One sensible way to do that is by investing in dividend-paying stocks. First, dividends are generally taxed at a lower level than your wages. For qualified dividends (which most of yours are likely to be), the tax rate is 20%, while the marginal tax rates on added wages can run as high as 39.6%.

Second, dividend stocks are relatively attractive in the current low-yield interest rate environment. Right now, the 10-year U.S. Treasury bond yields 2.4% and the average 5-year certificate of deposit pays 1.5%, while the broader S&P 500 currently has a dividend yield of 1.9%.

Source: Fool.com