Top 10 Reasons Dividend Investing Is Good
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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.
8 Comments on this post
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thatedeguy said:
Don’t forget that 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?
February 17th, 2007 at 7:30 am -
Mike said:
If I can borrow from Derek Foster – as a source of income, dividends have the advantage that if there are no material changes to the company then the div 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 everytime there is a correction in the markets.
February 17th, 2007 at 9:41 am -
Tyler said:
This might be similar to #1 on your list, but Dividends cannot be “faked” or “fudged” where as creative accounting practices can influence reported earnings and thus the expectaion of growth.
Great list!
Keep up the good work.
TylerFebruary 17th, 2007 at 10:31 am -
Deborah said:
I think that because investors are looking for good dividend yields dividend stocks tend to not get grossly over valued.
February 17th, 2007 at 9:25 pm -
Mark said:
I forget the exact number, but a huge percentage of the total market return is accounted for by dividends. So it makes sense to choose stocks with dividends.
February 18th, 2007 at 3:14 pm -
Raj said:
* Dividend-paying stocks hold equity price better in economic or market downturns;
* Dividend-paying stocks tend to have more moderate declines in case earnings don’t meet Wall-Street expectations, rlative to non-dividend paying stocks.
February 20th, 2007 at 5:51 am -
Growth in Value said:
Raj sort of covered this, but what I really like about dividend stocks is that they give you something to cling to in bear markets. Not only do they tend not to get hit as hard, but they proivde that trickle of income to get you through it. All the better if you reinvest it.
February 21st, 2007 at 9:54 am
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