Relying on dividend-paying stocks for income comes with risks

— -- Q: Can you name a few stocks that have relatively high dividend yields that are good for investors looking for income?

A: It always makes me a bit nervous when investors looking for income consider dividend-paying stocks.

Certainly, dividend-paying stocks can fit into a total portfolio set up to accumulate income. Stocks, in addition to sometimes offering attractive yields, also come with the extra benefit of hopefully appreciating in price. And unlike bonds, which pay a fixed amount every period, companies can and do often increase their dividend payments.

With that said, dividend-paying stocks are in no way a replacement for bonds in a portfolio for income. Remember that companies can suspend or cut their dividends at any time. And when times get tough, as they did in 2008 and 2009, one of the things companies often do is cut their dividends. That's a big problem if you're relying on dividends to pay your rent, mortgage or other bills.

In fact, the dividend payments made by stocks in the Standard & Poor's 500 are down 32% from the payment made in July 2008, says S&P. It was the worst July for dividend payments since 2002. Standard & Poor's estimates S&P 500 investors will receive $61.5 billion less in dividend payments this year than they did last year.

Now that you understand some of the advantages and disadvantages of counting on dividends for income, the chart at the left is a variation of the list you asked for.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz