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As long as you reinvest the dividends, income stocks can deliver returns
competitive with growth stocks. The following example compares what you'd get
by investing $10,000 in a high-dividend stock, the banking giant J.P. Morgan
Chase, and Tyco International, a growth-oriented conglomerate with only a
token dividend. We used the company's current dividend to estimate the divi-
dend yield for the first year and historical dividend payout trends to esti-
mate how fast their dividends will grow. For stock price appreciation, we
assumed stock prices would grow at two-thirds of the Wall Street analysts'
five-year estimated earnings growth rate.



J.P. MORGAN CHASE*               YEAR 1    YEAR 2    YEAR 3    YEAR 4     YEAR 5



VALUE OF STOCK REINVESTING
 DIVIDEND                       $10,000   $11,189   $12,575   $14,134    $15,886



(VALUE OF DIVIDEND
 BEFORE REINVESTING)             360       455       512       575        646






TYCO INTERNATIONAL**             YEAR 1    YEAR 2    YEAR 3    YEAR 4     YEAR 5



VALUE OF STOCK REINVESTING
 DIVIDEND                        10,000    11,200    12,544    14,049     15,735



(VALUE OF DIVIDEND
 BEFORE REINVESTING)             5         6         6         7          8



By the fifth year, the total value of the J.P. Morgan Chase investment
would exceed that in Tyco International.



* 3.6% current dividend yield; 13.0% annual dividend growth; 8.0% annual
capital appreciation
** 0.05% current dividend yield; 0% annual dividend growth; 12% annual
capital appreciation



Data: BusinessWeek, Thomson Financial/First Call