Pros and Cons of Dividend Investing
What are the pros and cons of dividend investing? Dividend investing is buying shares from companies that have a high dividend yield. These yields could be anywhere from 4%-6%, and sometimes even 8% percent. Usually, when a company is paying a high dividend, it means it is not a high-growth company. These companies are typically older, and more established and pay good income, hence the dividend. Historically, those companies also tend to be a little less volatile. So, many people will choose to buy the slow and steady stocks that pay the income. Unfortunately, over the last couple of decades that has shifted a little.
Even after 2022, which was a bad year in the stock market, the trend is that growth stocks like information technology stocks such as Apple and Google continue to do really well. This doesn’t mean that the dividend strategy is bad, but you have to set your expectations and understand that you’re going to have overall lower returns for any new money going to dividend stocks. Overall, the ultimate goal is to have your money working for you, and to always focus on investing for the long term.
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Casey Smith
President, Wiser Wealth Management
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