Why invest in Dividend Stocks?
If you build the right portfolio you can set up a wealth building machine! It doesn’t happen overnight but you can build a portfolio that can provide a 10% annual rate of return and pay you dividend along the way. When you choose to leverage the dividend re-investing program (DRIP), you put compound growth on autopilot and if you have dividend growth stocks such as the Dividend Ambassadors, you have an accelerated growth.
Here are some reasons why investors seek dividend stocks.
- Seek regular income – often times, income seekings focus on REITs or high-yield stocks. There is very little growth but you can earn more from your portfolio today.
- Getting paid while markets fluctuate – dividend stock prices fluctuate just like any other stocks on the markets but dividends paid from strong dividend stocks can be consistent and even grow if you pick dividend growth stocks.
- Manage volatility throughblue-chip dividend stocks – blue-chip stocks can provide less volatility and troubled times and are considered safe dividend investments.
- Higher returns from dividend growth stocks – dividend growth stocks can provide higher growth since they should only be able to grow their dividends if the company grow its bottom line. See the dividend triangle.
- Beat the markets – if you select the right dividend growth stocks, you can beat the markets.
- Avoid depleting your portfolio from withdrawals and retire with dividend income – worried about outliving your money? Dividend investing can help you avoid withdrawing and live from your portfolio dividend.
- Predictable income today and tomorrow – dividend income from dependable companies is predictable. Dividend Aristocrats have paid grown their dividends for 25 years.
- All of the above
In the end, investing in solid dividend growth stocks can be less stressful. In bear markets, you still get paid to wait. With DRIP, you get to buy more stocks and average your cost over time. No market timing involved.
You can see my dividend income history as proof that dividend investing works and is totally worth the effort needed to find a strong dividend growth company.