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While Washington Stews, You Can Cash In on the Biggest "Tax-Inversion" Deal in History

Back in June 2012, we recommended that you pick up shares of Big Pharma player Abbott Laboratories Inc. (NYSE: ABT). The reason: Abbott was planning to split in two at the end of the year, meaning folks who took our advice would end up with stakes in two companies for the price of one.

There was more than bargain-basement thinking at work here.

You see, these corporate breakups – known as spin-offs – have a habit of turning into market-beating profit plays. And the newly minted spin-off firms often end up as takeover fodder – also at big profits.

Abbott followed part of that blueprint.

  • 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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