By Clyde Noel

There was a time during the 1990s when stock dividends were scorned. They were considered about as exciting as collecting stamps, and the reward was considered minimal.

Today, with investors counting their losses and nursing tech-stock hangovers, companies with good earnings and paying dividends have become desired investments.

Since the tech bubble burst, dividend-paying companies, such as Minnesota Mining and Manufacturing, Duke Energy and Johnson and Johnson, have gained respect because of their dividend yield.

“I work with many retired clients, and they love their dividends,” said Bella Berlly, a Los Altos certified financial planner. “It’s nice to have consistent dividend payers with a healthy growth like some of the REITs we recommend.”

Berlly suggests her clients take the money and run. Many companies offer dividend reinvestment plans as a way shareholders can reinvest dividends to purchase more stock.

“In a down market, when stock prices continue to go down, reinvesting the dividend is a losing play,” Berlly said. “I suggest getting that cash in your own hands every quarter.”

Rick Glaze, president of Glaze Capital Management in Los Altos, said dividends have been decreasing in recent years. In 1970 some 98 percent of the S&P 500 stocks paid dividends, but last year only about 70 percent did.

“Lower interest rates have made a difference in dividends,” Glaze said. “When the Fed funds are in a 1.75 percent range, dividends are around a 2 percent yield.”

There’s another thing to consider. Glaze said not to go after the company with the highest yield, because that could signal the company is in trouble. You want the right combination of yield, price, steady dividend increase and growth potential.

Economists take a different view of dividends. They suggest avoiding stocks that produce dividends because they are taxed at ordinary income rates, which top out at 39.6 percent.

Investors should buy into companies that retain their earnings to finance growth and buy back stock. Investors should take their profits when they sell their stock, since capital gains are taxed at only a 20 percent rate.

Taxes shouldn’t be a worry for investors, since 60 percent of stocks and mutual funds are held in accounts such as IRAs.

From a technical point of view, the corporation’s board of directors is responsible for declaring the dividend. Once a dividend has been declared, a “date of record” is established. That means stockholders on record on or before that date are entitled to the dividend.

Anyone buying the stock after that date won’t receive a dividend until the next quarter or when the board declares another date of record.