5 things you should notice if you want to invest in Dividend Stocks

    If you’ve ever had occasion to look into the academic research comparing different types of returns from stocks that have different characteristics, as a class, dividend stocks tend to do better than the average stock over long periods of time.

    There are a multitude of reasons as to why this occurs but it’s a powerful enough force that many investors have done quite well for themselves over an investing lifetime by focusing on dividend stocks, specifically one of two strategies – dividend growth, which focuses on acquiring a diversified portfolio of companies that have raised their dividends at rates considerably above average and high dividend yield, which focuses on stocks that offer significantly above-average dividend yields as measured by the dividend rate compared to the stock market price.

    I happened to be up working late on launching the new asset management company my family is establishing this year and, despite it being 3:46 in the morning, am not quite ready to go to sleep. I thought it would be useful to sit down for a moment and break out five reasons dividend stocks are so intriguing to investors who prioritize long-term wealth accumulation.

    My hope is that by giving you a basic framework, you can understand some of the forces at play; how human nature, accounting, business management, and the stock market all come together in a way that can allow a prudent investor to enjoy streams of passive income from his or her holdings.

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