Dividend investing: Are you convinced?

by Kristina on October 16, 2013 · 4 comments

dividend investing, investment, stock market

Good morning Dinks.  So often we discuss investment trends and types of investments, but today I want to discuss our investment strategies.  Different people have different investment strategies based on their personality, risk tolerance and time horizon.  If you are saving for the short term maybe you are putting your money into a high interest savings account because you don’t want to take any risk with your money.  If you are young and saving for your retirement in the long term maybe you are investing in very specific company stocks, geographic regions or specific industries because you are comfortable taking risk over the long term.

Do you invest in dividends?

Maybe you prefer to earn a steady (but low) interest because you are a more conservative investor.  If you don’t like to take any risk on your hard earned money then you are definitely a more conservative investor.  If don’t mind taking a gamble with your money because you don’t mind taking risks in order to potentially gain more on your investments then you are definitely a growth oriented investor.  So whether you prefer to earn a conservative interest or growth with capital gains, we want to know…how are Dinks investing their money.

If you have read any personal finance blogs lately (or ever) then you have probably read a post or two about dividend investing.  Actually there are financial bloggers and investment professionals who have published books on the sole topic of dividend investing – how to do it, why it’s a good idea and the benefits of receiving dividends.

Some investment professionals consider dividends to be conservative investments because they pay out a steady stream of income in the form of quarterly dividend payments.  Some other investment professionals consider dividends to be equity investments because they invest in stocks of specific companies.  If investing in specific company stocks is a little bit too high risk for you then you can invest in dividend stocks indirectly through pooled investments such as mutual funds and ETFs.

The benefits of dividend investing

I personally like investing in dividends because they provide a perfect balance between income and equity – so I absolutely understand why they are considered to be both. Dividend stocks invest in large companies that pay out a percentage of their profits to their share owners.  So technically they are equity investments because they invest in stocks of companies, but they also pay out income (usually on a quarterly basis).

I hold dividends indirectly through mutual funds because I like the diversification factor of investing in several different countries without having the minimum required investment amount. However, I also hold stocks directly through myself brokerage account. I invest in companies such as Coca-Cola, Disney and JP Morgan Chase Bank.

I am admittedly not a risk taker when it comes to my investments, so I like the security of investing in dividends because they invest in large, well-known companies that have a history of stable growth.  Because I am also investing in stocks with my dividend investments I have the potential for capital growth over the long term when the stock price goes up.  It’s a win-win.

Do you invest in dividends?

Photo by pinksherbert

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{ 3 comments… read them below or add one }

1 Kathy October 16, 2013 at 8:47 am

Dividend investing is fabulous! We choose highly rated companies with dividends over 4% {AT&T is great} and along with bonds we get a payment nearly every week of the year. It’s like receiving free money. Plus, your stock may increase in value as well which makes the old net worth figure increase. Just do your research so that you can choose wisely.

2 dojo October 17, 2013 at 4:47 am

Right now we don’t have too many investment opportunities in my country and it’s really driving me crazy. I would love to start investing, aside just saving money. Even if I don’t have too much to invest, it would be a good exercise and, in time, I should get some better results.

3 James October 17, 2013 at 11:42 pm

Dude…investing in dividends is such a no brainer. If you can do it, you should totally get as much much dividend paying stock as possible.

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