- Pros
- Share investors can generate a consistent income from this stock
- Very passive, you can have dividends automatically reinvest
- Profitable companies frequently increase dividends
- Stable established companies - less volatility
- Holds up better in bear market
- More tax efficient than bonds
- Paid two different ways: stock price rise and cash dividend
- Dividend can offset some stock price loss
- Inflation resistant
- As profits rise, so do dividend payments
- compounding interest
- Share investors can generate a consistent income from this stock
- Cons
- Are not guaranteed
- Companies can lower dividend payments or stop them at any time
- Lack of diversification
- Most dividend stocks are old school utility industry, what if that industry doesn't perform well that year.
- Most faster-growing stocks with potential don't have dividends. Like High tech.
- Very long-term investment 5+ years. Slow growing.
- Riskier than high-quality bonds.
- Can be misleading to investors through the dividend yield calculation.
- Eg. If stocks were $50 and paid $1 dividend per stock. Then the stock price dropped to $25 and still continued to pay $1 dividend per share. The dividend can look more attractive.
- Tax rates can change anytime.
- Are not guaranteed
feb 8 2018 ∞
feb 8 2018 +
feb 8 2018 +