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People typically invest in bonds, bond mutual funds, or bond exchange traded funds (ETFs) for two reasons: as a stabilizing hedge against the potential loss of capital associated with downturns in the equity markets, especially growth stocks; and as a source of income. But bonds today are at risk due to rising interest rates and possible inflation, both of which tend to result in a reduction in bond prices, and hence in the investor's principal.
Since taxes on both stocks' capital gains and on most equity dividends have been lowered, the historical returns of stocks have been superior to those of bonds, and stocks with high dividends are bond-like in offering less volatility than the average growth asset while nonetheless providing yields often competitive with those of bonds, but stocks held for the long-term, unlike bonds, sometimes will show substantial increases in their yield amounts over time, relatively high dividend paying equity securities may now be replacing bonds as the safer, income producing assets of choice.
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