Dividend investing is basically buying great dividend paying stocks and then keep them and benefit from the extra income that they bring. This has a few big advantages.
1. Low Maintenance
It doesn’t take a lot of work to maintain this. You can very easily get into strong stocks that pay dividends and then hold onto them for the long term without having to manage your account.
2. Passive Income
It also helps investors make consistent cash flow pretty easily. Simply by owning shares of dividend stocks you can make money consistently month after month. If you own enough shares you can even use it to supplement your income.
3. Two Possibilities to Grow
Simply by investing into strong stocks that pay dividends you have two ways to grow your money. These are dividends and the appreciation of the stock. Also remember that as the stock price increases over time so do the dividends, this gives investors a real opportunity to make and grow their passive cash flow.
But dividend investing does have some disadvantages. The most important one is that it takes money to make money.
Dividend investing is not really a growth strategy; instead it is a strategy to make an income off of your money once you have money. Often times you do need a decent amount of money to invest before you can actually make a living from investing into dividends.
For instance say a stock has a dividend yield of 7%, which is pretty high, if you wanted to make $70,000 a year in dividends you would need to invest $1,000,000 into it. The bigger your goal is the more money you need to invest.
It may not be the most glamorous way to make money, but it is a nice consistent way to grow your money over time while at the same time get some extra cash flow every month, so it is worth looking into, especially if you are worried about retirement.
Tags: dividend investing, investing for dividends, investing in dividends