Why Should I Invest in Dividend Income over Growth?

Welcome to Dividend Compounders with Cheese!

I’m not retired yet, but here’s why I choose dividend investing for my retirement strategy & why I prefer dividends over growth investing.

Investing in dividend income over growth stocks is a decision that depends on your financial goals, risk tolerance, and investment strategy. Here are several reasons why dividend income investing may be advantageous for some investors:

1. Steady Income Stream
Predictable Cash Flow: Dividend-paying stocks provide regular income in the form of dividends, which can be appealing for investors seeking a steady cash flow. This income can supplement other sources of income and be reinvested for compound growth.

Retirement Income: Dividend income can be particularly beneficial for retirees or those approaching retirement who rely on investment income to cover living expenses.

2. Historical Performance and Stability
Lower Volatility: Dividend-paying stocks, especially those from established companies with a history of consistent dividend payments, tend to be less volatile than growth stocks. This can provide stability during market downturns.

Total Return Approach: Dividend stocks offer both dividend income and potential capital appreciation. They can provide competitive long-term returns, combining income generation with growth potential.

3. Compounding Benefits
Reinvestment Opportunities: Reinvesting dividends allows investors to purchase more shares of the stock, benefiting from the power of compounding. Over time, this can significantly increase the value of your investment.

Long-Term Wealth Building: Dividend reinvestment can accelerate wealth accumulation, especially when started early and compounded over many years.

4. Inflation Hedge
Dividend Growth: Many dividend-paying companies increase their dividends over time, which helps investors keep pace with inflation. This can help preserve the purchasing power of your investment over the long term.
5. Risk Management
Quality Companies: Dividend-paying companies tend to be mature, financially stable firms with strong cash flows and consistent earnings. This can reduce the risk of investing in volatile or speculative companies.
6. Psychological Benefits
Income Confirmation: Regular dividend payments can provide a sense of financial security and confirmation of investment success, boosting investor confidence during market fluctuations.
Considerations:
Growth Potential: Growth stocks may outperform dividend stocks in terms of capital appreciation during bull markets. Investors with a higher risk tolerance and longer investment horizon may prefer growth stocks for higher potential returns.

Market Conditions: Different economic cycles may favor either dividend income or growth strategies. Consider diversifying your portfolio to balance income generation with growth opportunities.

Conclusion:
Investing in dividend income over growth stocks can be beneficial for investors seeking regular income, stability, and a long-term total return approach. It provides predictable cash flow, potential for capital appreciation, and the benefits of compounding over time. However, the suitability of dividend income versus growth investing depends on individual financial goals, risk tolerance, and investment time horizon. Diversification and a balanced approach can help investors harness the benefits of both strategies within their portfolio.

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[UsernameAmos]

I’m not retired yet, but here’s why I choose dividend investing for my retirement strategy & why I prefer dividends over growth investing.

[OhhHellNoYouWont]

I run a mix. Growth stocks/ETFs in my Roth and 401k. I run dividends in my Individual investment account. Seeing the payments come month after month keeps me in the zone. Works out best for me.

[michaeldawn]

I'm a Dividend Investor now after losing, $60K chasing growth stocks. I needed this video four years ago. Fortunately, I turned my ship around. Needless to say I agree with you. 98% of my dividend stocks and ETFs are green and producing monthly and quarterly dividends! What a difference...

[raygrenade]

i agree that its easier to fake growth in a growth stock, bc u rely on things that don't exist yet. cant fake a dividend payment

[catherinerea]

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $560K for sometime now, my major challenge is not knowing the best entry and exit strategie;s ... I would greatly appreciate any suggestions.

[dral]

I will always be a dividend investor "For Life." If it weren't for dividends, i wouldn't be interested too much in investing in the stock market. I'm not investing for the sake of investing or to sound cool. I'm investing so that i can have a comfortable life as i grow older. Not to mention the monthly and quarterly income that's helping me combat the high cost of living. My ultimate goal is to eventually quit my 9-5 and travel while my investments are doing the work for me. God bless the creator of this video. New subscriber. 🙏🏾

[raygrenade]

17:45 yes sir ! we all have our reasons, very few act on it. for me, the financial crisis robbed my family of love, and stole part of my childhood.

[wisulliv]

Total return is the true measure. Dividend stocks finish 2nd. I need more not less.

[bossballheaddawg]

also, i invest in etfs and mutual funds, a little better than individual stocks. however, i invest in dividend stocks too. i actually do both. you just said it! gowth that pays dividend!!!

[michaelb.]

It took me a few years of the 100% truth this video imparts to us. I am currently in the process of moving my portfolio over to dividend investing.

[JEEntertainment]

Loved the video, really well written and I liked the style, keep it up! Your humor and tangents really reminds me of the Econ professors I would have for my required Econ courses when I studied engineering. That's a good thing because I loved every one of their lectures

I'd love to see what you have in the future!

[JoeFromSomewhere]

Google is a dividend stock now! Love watching the big 7 all turn into dividend paying stocks!

Great video! Growth stocks theoretically could deliver better returns but dividend stocks encourages "buy and hold". I think many of peoples biggest missed opportunities are by letting go of a good stock too soon.

[SpencerInvests]

Great video! I always enjoy hearing why dividends are great, even if I've heard it before!

[Blubbha]

Agree on it. But Inwent fromnsingle stocks to balanced etfs. The reason is simple for me. I rather build aanother income stream instead of hasing singles stocks and move all the time my portfolio. Beside my salary thos seems to be the way for me. Steady income + dividends reinvesting + other projects to increase investment. Now I am on 640k net worth worth woth 37y with a family of 5 and I get 450 usd/month net dividends with 200k portfolio.

Dont chase too much investing opportunities and chase instead fogure iut to build another income stream. Gibes you new skills and a higher amount to invest.

[Pegaroo_]

How about using growth stocks to get you to your retirement amount quicker then switch to dividends for the stable income. Get the best of both worlds

[Ciborium]

Joseph Carlson did a video recently where he showed that the "normal" return of the stock market is actually abnormal. 80% of the time, returns will be higher than "normal" or negative. Only 20% of the time does the stock market return between 1% and 10%.

[DarkLord-fw]

MSCI, ITT, Parker Hannifin, Oracle, Elevance Health, Domino’s Pizza, Marsh & McLennan, Booz Allen Hamilton, UnitedHealth Group.
This are double digits dividend growers.

[o.c.g.m]

Hey Youngblood. Great video always. Try reading One up on Wall Street by Peter Lynch. I've read it twice

[lucauau]

I totally agree with you.. but is may also happen to dividend stock to drop, to cut dividend, to loss its position, etc etc.
Maybe it’s much less probable.. but also this kind of investment has its risks.
Stock selection is essential in this area as well portfolio maintenance 😊

[mrx]

Or you keep stocks until they start paying dividends. Meta, Booking Holdings just initiated a dividend which will likely grow quite quickly now.