Retirees traditionally have moved the majority of their portfolios to stocks, but in light of increasing awareness of the likelihood of a long retirement—coupled with low tax rates on dividends—they are moving more of their money into dividend-paying stocks.

“Equity income is replacing bond income,” Duncan Richardson, chief equity investment officer at Eaton Vance told MarketWatch. “We’re only in the third or fourth inning of the dividend-investing cycle.” In fact, Richardson goes so far as to say that current asset allocation models are wrong.

Since 2003, when the tax rate on dividends was reduced to 15%, $16 billion has flowed into Eaton Vance’s equity income funds. Richardson says that trend should continue into 2007 because stronger financials portend strong corporate earnings; over the next three years, he sees stocks rising 50%.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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