![]() ![]() The strategy of dividend growth investing has some advantages for individual investors but there are also some risks since we are talking about investing in stocks.Īdvantages of Dividend Growth Investing Dividend Growth Investing Has Higher ReturnsĬompanies that pay and grow their dividend annually have consistently outperformed companies that pay a constant dividend or do not pay a dividend at all over longer periods of time. Finally, the dividend has to be sustainable meaning it must be safe from the perspective of earnings, cash flow, and debt. The adverse effect on your portfolio’s total value would be significant. For example, imagine if you owned a high percentage of energy or retails stocks during the COVID-19 pandemic. You cannot own stocks only in a few sectors as it leads to excessive risk. Next, dividend growth investing requires one to diversify across sectors and industries. Another key aspect is that the dividends are reinvested in the same stock to allow compounding to occur over longer periods of time. The goal is to generate a growing passive income stream but also get some capital appreciation, i.e., a rising stock price. What is Dividend Growth Investing?ĭividend growth investing is an investing strategy where one invests in a basket of companies that increase the dividend each year. The Simply Investing Course* is a good value and fairly comprehensive. I highly recommend them and use their insights for my own stock research. If you want to educate yourself more about dividend investing, then I suggest taking a course. ![]() The service provides top 10 stock picks with discussion of advantages, valuation, and risks. #Dividend millionaire pdf trialThere is a 7-day free trial and grace period so it is risk free. It is a good value and one of the best dividend stock newsletters available. If you are interested in investing in stocks that pay dividends I recommend signing up for the Sure Dividend Newsletter*. Advantages and Risks of Dividend Growth Investing In this article, I discuss and outline some of the advantages and risks of dividend growth investing. But if you are a new investor thinking about practicing this strategy then you should research dividend growth investing before trying it. The simplicity and low costs of a dividend growth investing strategy means that even a new investor can easily follow it if they put in the requisite time and effort. In fact, the costs of dividend growth investing may even be less than the costs of index investing. Additionally, the cost of following this strategy has become minimal since there are no trading commissions on stocks at most brokerages now. One does not need access to real time market data nor trading algorithms to practice the strategy. There are other investing strategies, but dividend growth investing is appealing since it is simple. It is a way to build wealth over time by building a growing stream of dividends combined with capital appreciation. I like dividend growth investing since I personally think the advantages outweigh the risks. ![]()
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