Dividend stocks have proved time and again to be a superior investing strategy. We all want capital appreciation, or to see our stocks grow in value over time, but dividends are what really drive excess returns.
Also, no matter what market conditions are like, dividend stocks outperform those that don’t make a payout. There is no decade where dividend stocks did not generate positive returns. The market, as a whole, can’t say that.
The reason is simple. Companies that pay dividends are typically healthier than those that don’t. They have been fire-tested by the market and still thrive. Dividends also help buffer the impact of market downturns, contributing to lower volatility. That’s why dividend stocks need to be an essential part of your portfolio.
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