Pros And Cons Of Dividend Investing: Ultimate Guide for Beginners

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Investing in dividends allows an investor to take advantage of many aspects of investing while moving away from reliance on inherently volatile stock market prices.

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Dividend investing consists of a strategy which emphasizes stocks that pay significant dividend payments to create income.

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Dividends are paid based on a per share basis (each share is entitled to a dividend payment), with an ex-dividend date being the deadline for making the stock purchase.

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Pros And Cons Of Dividend Investing

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Pro #1: Insulation From The Stock Market

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One of the many advantages of investing based on dividends is the insulation from the stock market.

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The stock market can hardly be predicted with any accuracy. Stocks fluctuate based on the fickle demands of investors and the actions of massive hedge funds and other large companies.

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Famous investor Warren Buffet believes that the movements of these actions cannot be predicted by anyone.

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Con #1: Less Potential For Massive Gains

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One downside to investing in stocks for the dividend is an eventual cap on returns.

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