Discounted valuations matter to many others as well. “Healthcare, specific financials, industrials and consumer discretionary stocks that grow their dividends offer investors excellent value at current levels,” says Bob Kalman, a senior portfolio manager at Miramar Capital in Northbrook, Ill.

Nevertheless, he recommends mixing high and low dividend payers. “A combination of lower dividend, higher growth stocks and higher dividend issues [can] create a portfolio that balances both income and growth,” he says.

Interest Rates
The effect of high interest rates on dividend-paying stocks is another source of some disagreement among investors. “When competing asset classes such as bonds are paying competitive yields, many investors may choose the ‘safer’ option of bonds,” says O. Emerson Ham III, a senior partner at Sound View Wealth Advisors in Savannah, Ga. “Bonds have gotten to the point where their yields are competitive even on a tax-adjusted basis.”

On the other hand, wealthy investors often prefer dividend-paying stocks to bonds, since bond payouts are taxed as ordinary income while most stock dividends are “qualified” for the lower long-term capital gains tax rate. (To be qualified, the stock must be owned for a period of time and can’t be a holding in a pass-through company.)

Another consideration, however, is that high interest rates have increased borrowing costs, making it “tougher for companies to borrow” and reward shareholders, notes Gary Schwartz, president of Madison Planning Group in White Plains, N.Y.

International Markets
Many investors looking for higher dividends look overseas, since the yields in international markets are more attractive. 

LPL’s Buchbinder favors Japan, “where dividends have started to increase as companies focus more on returning capital to shareholders,” he says.

Some U.S. investors are looking north. “The Canadian market has shown more growth in dividends than many other regions, while also having a relatively stable currency,” says Sam Burns, chief strategist at Mill Street Research in Sherborn, Mass. “It may be worth looking at some of the Canadian dividend-paying stocks.”

There are risks in going overseas for dividends, though. “There’s currency risk,” says Schwartz, since dividends paid in a local currency can lose value against U.S. dollars. What’s more, he says, any gains from international securities may be subject to double taxation—in both the U.S. and the home country.

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