Top Nav

Dividend Stocks

Dividend stocks – that term says a lot. You buy a stock and on a recurring basis it pays you a cash dividend.  And over time, thanks to those cash distributions and capital appreciation fueled by shareholder loyalty, the stock price rises. That’s a great way to build wealth.

You see, back in the good old days, in the early 20th century for example, dividend stocks were a big focus for investors…and were expected. Dividends were a primary reason why people bought stocks at all – for the income. It was a big deal to be a shareholder…companies valued them.

Now, there has always been periods of big-time stock market gains. Which does, of course, distract some investors from focusing on dividends. Their expectations shift from long term wealth building to short term lottery winnings. But at the end of the day (or year, or decade), when those histrionic returns recede, logic prevails and stock investors’ attention comes back to dividends.

dividend-stocksDividend Stocks: Past and Future

You see, times change, and investors’ priorities vary, but history keeps proving that investing in stocks that pay dividends is one of the best, if not the best, way to build wealth. The reason is fairly simple. If you buy a stock for growth, you may or may not get it. You are speculating, hoping that your analysis is correct, that the stock you’ve invested in will increase in value. But it might not.

However, if you buy a stock that has paid a consistent and growing dividend, well, you can fairly well calculate your growth rate. Consider the Standard & Poor’s 500 stock index. Study after study has proven that the returns of the index without dividends amounts to a fraction of what they are with reinvested dividends factored in. Which means one thing.

If you are investing in stocks on an individual basis, not in a mutual fund or an ETF, and you are not considering whether or not the stock is paying a dividend, you may just be gambling and may ultimately end up unsatisfied with your results. That’s because dividends are a measure of a company’s success, a company’s maturity and a company’s commitment to its shareholders.

The purpose of a company is to increase shareholder value. Paying a dividend attracts new investors and keeps loyal investors in place. Stocks that do not pay a dividend are required to deliver better-than-expected earnings results – merely meeting expectations is not enough and may send a stock price tumbling.

Wise investors, and those who wish to count on their wealth increasing, have always and will continue to look to dividend stocks.

Did Janet Yellen Green-Light Investors to Buy REITs?

With the Federal Reserve once again postponing its plans to raise interest rates, is it time to buy REITs?

A ‘Dumb’ Deutsche Bank Investment Could Still Be a Winner

Deutsche Bank announced Wednesday that it will absorb a $6.5 billion write-down in goodwill and other intangible assets.

Buy the Best Biotech Stock Now at a Big Discount

In the wake of the Hillary Clinton-related biotechnology sell-off, the best biotech stock to buy now trades at a P/E ratio of 10 and pays a 1.7% dividend.

Should Investors Bet on This 6% Dividend Stock?

Gaming stocks have suffered a brutal decline this year, due to fears over the fate of gaming activity in Macau, a special administrative region of China.

PepsiCo Stock Pops on Earnings: Is It a Buy?

PepsiCo stock jumped following the company's earnings beat, despite a hit to its bottom line due to impairment charges related to its Venezuelan operations.

More Recent Dividend Stocks Articles

View All Dividend Stocks Articles

Strike Price Offer

The Strike Price is your leading resource for insight into the world of options trading. Chief options analyst Andy Crowder will guide you through the best options strategies—telling you exactly where he's putting his money, and how you can make safe, reliable gains from some simple options trades. Your FREE subscription also includes Andy’s report "The One Vital Rule for Every Options Trade"—which reveals the #1 rule to achieve a high win-rate in every options trade.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.