- They provide a steady stream of income;
- Over the long term they offer growth through share price appreciation, which helps increase the real (after-inflation) value of an investors portfolio;
- Dividend reinvestment allows your investment to grow at a compounded rate of return;
- Dividend reinvestment also promotes dollar-cost averaging; and
- Dividend-paying stocks generally have lower price volatility than non-dividend-paying stocks, since during market declines the dividend stream becomes more important to investors.
Basic Ratios for Building a Dividend-Based Stock Portfolio
by Don Schreiber Jr.
There are five advantages dividend-paying stocks can provide investors:
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