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In the mid-1990s, I was fortunate to meet and start working with an Upstate New York money manager named Anthony M. Gallea.

The relationship began when I attended and wrote stories about some of the investment seminars he periodically held for prospective and existing clients. He then became a “source” for some of the investment stories I periodically wrote for Gannett Newspapers. And we ultimately collaborated on a pretty successful book about “Contrarian Investing” that was published by Prentice Hall.

Along the way, Tony shared some pretty important snippets of investing wisdom…

  • Featured Story

    Dividend Stocks: How to Soften the Bear's Short-Term Bite

    For investors, May started out as a month of great promise. On May 1, the Dow Jones Industrial Average climbed 65.69 points, closing at 13,279.

    Since then, however, that promise has turned to plummet.

    The Dow posted losses on 12 of the next 14 trading days, culminating with a drop of 46 points last Friday. In all, since May 1, the Dow has lost 6.17%.

    But did you know there was a way you could have avoided the bulk of the damage?

    All you had to do was hold the dividend stocks in the 30-stock DJIA that offer the highest current yield.

    In fact, numerous academic studies have verified the impressive contribution of dividend stocks to long-term market performance. According to certain studies, dividend yields have been responsible for as much as 90% of stock returns over the past century.

    And Standard & Poor's reported last year that the dividend component was "responsible for 44% of the total return" of the S&P 500 over the 80 years from 1930 through 2010.

    That is quite impressive considering nearly a third of S&P stocks don't even pay a dividend.

    Dividend Stocks and Downturns

    However, what these studies don't show is just how effective dividends can be in cushioning the impact of a short-term decline in stocks - both in terms of resisting downward price pressure and offsetting capital losses.

    So, let's look at some numbers from this month as the Dow Jones Industrial Average as a whole fell 836.83 points, or 6.30%, from May 1 to May 17.

    Keep in mind, of course, that they're not based on a scientific study, but rather casual observation.

    What you'll learn may make you see dividend stocks in a different light.

    To continue reading, please click here...
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