r 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact,

In 1934, Benjamin Graham and David Dodd wrote in their classic book Security Analysis, "The prime purpose of a business corporation is to pay dividends to its owners." Many investors agreed, expecting stocks to pay higher dividends than bonds to make up for stocks' additional risk.

But by the 1990’s, investors’ interest in dividends had pretty much dried up. With the market rising 20% to 30% or more per year, and some individual stocks much faster than that, dividend yields of 2% or 3% were real yawners. They did not play a role in most investors’ stock selections.

Times change. The bull market of 1982 to 2000 is history. So is the tech-telecom bubble of 1997-2000 that capped off that longest bull run in market history. The bubble deflated, leaving investors who held on with losses of 90% or more. Those losses have still not been made up. They will not be made up within many of our lifetimes.

Meanwhile, the baby boomers—the first of whom (like myself) were born in 1946, are moving into retirement age. Whereas at the height of the bubble in 1999, the oldest boomers were 53 years old—accumulating money as fast as we could for retirement--now we are 60. For some of us, the accumulation phase of our investing lives is over. For many others, it is coming to a rapid close. Thousands of boomers per month are retiring, taking packages, or otherwise ending their regular working lives.

And guess what? With retirement comes an interest in income! Retirees suddenly become less interested in two-baggers (a stock that doubles) than in satisfying their day-to-day money needs. For most boomer retirees, these needs are met through three sources:

• Pensions. Many (not all) boomer retirees have traditional pensions. Their number will dwindle each year, because so many companies that used to offer conventional retirement plans dropped them and are continuing to drop (or freeze) them as we speak. People at the leading edge of the boomer generation are more likely to have traditional pensions than people at the trailing edge. (The latter were born in 1957, and they are now 49 or 50 years old).

• Withdrawals from accumulated savings. Conventional advice is to limit these to 4% per year or so, or else you will outlive your money.

• Dividends! Suddenly, that 2% or 3% that looked like junk in 1999 has some attractive qualities. If a boomer has saved, say $500,000, a 3% yield kicks out $15,000 per year. Not a fortune, but a good chunk of many boomers’ income needs in retirement.

Notice that I did not list Social Security. No boomer is eligible yet for Social Security. As boomers reach 62 or 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact, i

bubble of 1997-2000 that capped off that longest bull run in market history. The bubble deflated, leaving investors who held on with losses of 90% or more. Those losses have still not been made up. They will not be made up within many of our lifetimes.

Meanwhile, the baby boomers—the first of whom (like myself) were born in 1946, are moving into retirement age. Whereas at the height of the bubble in 1999, the oldest boomers were 53 years old—accumulating money as fast as we could for retirement--now we are 60. For some of us, the accumulation phase of our investing lives is over. For many others, it is coming to a rapid close. Thousands of boomers per month are retiring, taking packages, or otherwise ending their regular working lives.

And guess what? With retirement comes an interest in income! Retirees suddenly become less interested in two-baggers (a stock that doubles) than in satisfying their day-to-day money needs. For most boomer retirees, these needs are met through three sources:

• Pensions. Many (not all) boomer retirees have traditional pensions. Their number will dwindle each year, because so many companies that used to offer conventional retirement plans dropped them and are continuing to drop (or freeze) them as we speak. People at the leading edge of the boomer generation are more likely to have traditional pensions than people at the trailing edge. (The latter were born in 1957, and they are now 49 or 50 years old).

• Withdrawals from accumulated savings. Conventional advice is to limit these to 4% per year or so, or else you will outlive your money.

• Dividends! Suddenly, that 2% or 3% that looked like junk in 1999 has some attractive qualities. If a boomer has saved, say $500,000, a 3% yield kicks out $15,000 per year. Not a fortune, but a good chunk of many boomers’ income needs in retirement.

Notice that I did not list Social Security. No boomer is eligible yet for Social Security. As boomers reach 62 or 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact,

er month are retiring, taking packages, or otherwise ending their regular working lives.

And guess what? With retirement comes an interest in income! Retirees suddenly become less interested in two-baggers (a stock that doubles) than in satisfying their day-to-day money needs. For most boomer retirees, these needs are met through three sources:

• Pensions. Many (not all) boomer retirees have traditional pensions. Their number will dwindle each year, because so many companies that used to offer conventional retirement plans dropped them and are continuing to drop (or freeze) them as we speak. People at the leading edge of the boomer generation are more likely to have traditional pensions than people at the trailing edge. (The latter were born in 1957, and they are now 49 or 50 years old).

• Withdrawals from accumulated savings. Conventional advice is to limit these to 4% per year or so, or else you will outlive your money.

• Dividends! Suddenly, that 2% or 3% that looked like junk in 1999 has some attractive qualities. If a boomer has saved, say $500,000, a 3% yield kicks out $15,000 per year. Not a fortune, but a good chunk of many boomers’ income needs in retirement.

Notice that I did not list Social Security. No boomer is eligible yet for Social Security. As boomers reach 62 or 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact,

e more likely to have traditional pensions than people at the trailing edge. (The latter were born in 1957, and they are now 49 or 50 years old).

• Withdrawals from accumulated savings. Conventional advice is to limit these to 4% per year or so, or else you will outlive your money.

• Dividends! Suddenly, that 2% or 3% that looked like junk in 1999 has some attractive qualities. If a boomer has saved, say $500,000, a 3% yield kicks out $15,000 per year. Not a fortune, but a good chunk of many boomers’ income needs in retirement.

Notice that I did not list Social Security. No boomer is eligible yet for Social Security. As boomers reach 62 or 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact,

r 65, of course, Social Security will kick in and become the fourth “leg of the stool” for meeting daily money needs.

Let’s recap this so far. Let’s say that a boomer who is already retired receives a pension of $25,000 per year, and also that he or she takes a drawdown of 4% of $500,000 savings, which equals $20,000 more per year. That’s $45,000 per year total. Let’s further postulate that this retiree needs $60,000 per year to live a good lifestyle. As we’ve already seen, if the boomer’s $500,000 in savings kicks out a 3% yield, that’s where the extra $15,000 will come from.

So suddenly, a 3% dividend yield looks mighty interesting. In fact, it is the difference between a comfortable and uncomfortable retirement for our boomer. And boomers are displaying an increasing appreciation of formerly scorned dividends.

I have a ringside seat on the explosion of interest in dividends and income. As the author of a book on stock investing, I advertise on Google—I purchase those little clickable text ads that appear above and to the right of your search results. The way it works is, I only pay Google when someone clicks on my ad and is transported to my book’s website.

I have ads tied to a couple hundred investment search terms that might be typed in by a Googler. I’ve grouped those search terms, and my ads, into six categories: Stocks Generally; Valuation and Value Investing; Stock Investing Books; Growth Investing; Picking Stocks; and Income and Dividends.

As you might imagine, the ads under Stocks Generally (which includes broad search terms like “stock investing”) are seen the most, because most searchers begin with generic inquiries. But those ads don’t generate the most clicks—not by a long shot.

That honor belongs to the search terms in my Income and Dividends category. Terms like “dividend paying stocks,” “dividend companies,” or simply “dividends.” In the past week, for example, I got 46 clicks (for cost control, I limit the number of clicks I receive per day). Of those 46 clicks, 35 (more than three-quarters) came from my Income and Dividends category. This despite the fact that those search terms comprise only about 15% of all the search terms I tie ads to. This has been going on ever since I started my Google campaign a couple of months ago.

Every time someone clicks on a Google ad, it is like a vote. It indicates interest. So it is very clear to me that investors searching on Google are showing a disproportionate interest in dividends and income. Given the important role that dividends can play in retirement, this no longer surprises me, although I will admit that I was shocked for the first couple of weeks. (I thought the Picking Stocks category would win easily.)

Happily, there is growing research that over the long term, dividend-paying stocks generate the best total returns. So the dividend-stock investor benefits in two ways: He or she gets an important income stream, and the stocks perform better overall. And there is yet a third advantage: Most dividends are taxed at 15%, which is lower than most investors’ marginal tax rate. Thus, dividends are the most tax-advantaged form of income you can have.

The lesson for investors, especially those needing income in retirement, is this: Make sure that your