Buy dividend stocks at a discount thru BDV

You have probably heard that stocks that pay a regular dividend can make a very good investment. This is especially true if you don't need the dividend income right away and can reinvest the dividends to buy more shares. Many of the online brokerage firms such as Charles Schwab and E*Trade will allow you to do this for free.

The longer your time horizon, the more time that the reinvestment of dividends has to work it's magic by compounding your investment returns. Dividend reinvestment works on the principal of dollar cost averaging which allows you to purchase more shares after the share price has fallen and fewer shares after the share price has risen.

If you're investing in dividend paying stocks, then chances are that you have a pretty solid investment to begin with. The Board of Directors of dividend paying stocks wouldn't authorize a dividend payment to shareholders unless they felt that the company's prospects were solid and the company would be able to continue to maintain that dividend payment, or increase it, for the foreseeable future. Companies that pay dividends tend to be larger and more established and well beyond the initial start-up and development phase that consumes usually all of the free cash flow of a young growth company.

Even better than owning one dividend paying stock is owning a portfolio of dividend paying stocks. As the saying goes, you don't want to hold all of your eggs in one basket. Holding a diversified portfolio of dividend paying stocks simply reduces your risk of any one stock investment performing poorly. Diversification is a great way to improve your investing returns while reducing risk.

The BlackRock Dividend Achievers Trust (NYSE: BDV) is a closed-end fund that trades on the stock market similar to an exchange traded fund (ETF). The fund manager of BDV has to maintain a portfolio with no less than 80% of the funds invested in with "Dividend Achiever" status - stocks that have raised dividends for at least 10 years in a row. Roughly 300 companies out of 20,000 publicly traded U.S. stocks meet the requirement for Dividend Achiever status.

BDV currently pays a dividend yield of 7.89% AND trades at a discount to net asset value of nearly 12% and the closing share price was $11.40 as of May 23, 2008. As of 12/31/07, BDV's top 5 holdings included Chevron, AT&T, General Electric, Altria Group and Pfizer.

Take a closer look at BDV to gain exposure to large capitalization, dividend paying stocks.