- Dividend stocks are great vehicles to build wealth and to live off your nest egg. It is best to start investing in dividend stocks as soon as you have some meaningful savings, in order to start the knowledge accumulation process early. You learn a great deal of knowledge when you are just starting out dividend investing, so as you get promotions and save more money for your dividend portfolio, you can be ready to accumulate your nest egg. Thus, dividend stocks work for all investors.
- A dividend stock portfolio can easily yield 3%-4% today, but this income stream will increase over time, thus protecting you against inflation. You will also generate capital gains in the process, as the companies earn more and become more valuable to investors. When growth stocks are down 50 – 60% from their highs during the next bear market, your dividend stocks will be down, but the level of income will likely remain the same and even increase. It is much easier to get scared and sell everything when your stocks are down 50% if all you rely on is growth and capital gains. During a recession you get none! With dividend stocks at least you get some return on investment that is positive at all times. During a bull market you get cap gains and dividends and hence you have your cake and eating it too.
Full Disclosure: Long V, MCD, WMT, JNJ, KO, PG