Wealthy Living

Pros And Cons Of Dividend Investing: Ultimate Guide for Beginners

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.

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

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.

Pros And Cons Of Dividend Investing

Pro #1:  Insulation From The Stock Market

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

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.

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

Con #1: Less Potential For Massive Gains

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

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