Top 10 Reasons Dividend Investing Is Good - Updated With Your Comments
- 4 Comment
I read a lot of articles on the web and books about dividend investing, and find that there is some real consistency in this literature concerning the top reasons dividend investing is a good approach. I would like to present these here and invite your feedback and comments on ones I may have missed. So go nuts, comment away!!
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* Dividends tend to indicate dependability and corporate transparency
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*Dividends receive preferential tax treatment over other income producing investments (i.e. bonds)
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* If you reinvest dividends, you start your own compounding machine - over time the amount you receive in dividends increases as you buy more and more shares
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* Companies that pay consistently growing dividends shows a commitment to their shareowners
Stocks that consistently increase their dividends tend to see their shares price appreciate over time
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*Stocks are certificates of ownership and therefore dividends are a profit sharing of sorts with the owners of the company. It’s your company, why shouldn’t you get some of the profit. - Submitted by thatedeguy
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*As a source of income, dividends have the advantage that if there are no material changes to the company then the dividend will stay the same even if the stock price changes with the general market. Those of us who are planning to live off withdrawals from our rrsps or other investment accounts will undoubtedly suffer from various heart ailments every time there is a correction in the markets. - Submitted by Mike.
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*Dividends cannot be “faked†or “fudged†where as creative accounting practices can influence reported earnings and thus the expectation of growth. - Submitted by Tyler
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*Because investors are looking for good dividend yields dividend stocks tend to not get grossly over valued. - Submitted by Deborah
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*A huge percentage of the total market return is accounted for by dividends. So it makes sense to choose stocks with dividends. - Submitted by Mark
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*Dividend-paying stocks hold equity price better in economic or market downturns. - Submitted by Raj
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* Dividend-paying stocks tend to have more moderate declines in case earnings don’t meet Wall-Street expectations, relative to non-dividend paying stocks. - Submitted by Raj
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*Dividend stocks give you something to cling to in bear markets. Not only do they tend not to get hit as hard, but they provide that trickle of income to get you through it. All the better if you reinvest it. - Submitted by Growth in Value
Again, I want to hear your reasons on why dividend investing is good. I plan to keep updating this list (and giving you credit) as they comments come in. Bring it on.
4 Comments on this post
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Gary Williams said:
Dividends are a good indicator of a company’s financial health. Share prices are completely arbitrary, and they tend to fluctuate with the market or with the company’s industry, while dividends fluctuate only when that specific company’s finances change.
A minor nit, the “i.e. bonds” in the second bullet should be “e.g. bonds”. “I.e.” means “specifically” or “in other words”. “E.g.” means “for example”.
March 7th, 2007 at 1:06 am -
深圳鲜花 said:
The first time I meet this ideal from your article, so I will try to understand your topoint for it.Sometimes new way to the truth for it. ah. isn’t it?
March 19th, 2007 at 6:58 am
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