Please ensure Javascript is enabled for purposes of website accessibility

Dividend Stocks

Investing in dividend stocks is a good way to build long-term wealth.

Dividend stocks aren’t dependent on their share price rising to be successful investments. When you buy a dividend stock, you’ll receive a steady stream of income—generally on a quarterly basis. If the market crashes and the share price begins to fall, the nice 3% or 4% yield (or higher) will soften the blow.

Dividends are a measure of a company’s success and its commitment to shareholders. The companies that consistently grow their dividends are the ones whose sales and earnings are also growing. Companies that lose money or fail to grow usually don’t pay a dividend.

When a company pays a dividend—and especially if it makes an effort to increase that dividend every year—it shows that it cares about rewarding shareholders. Paying a dividend is also a savvy way to attract investors, which is why the share prices of most dividend stocks appreciate over time.

Dividend-paying stocks aren’t going to make you rich overnight. But they can significantly build up your nest egg if you buy and hold them for years, or even decades.

Not all dividend-paying stocks build wealth. You need to search for investments with timelessness and longevity—companies that are sure to not only be around 20 or 30 years from now, but still thriving. Dividend stocks become more powerful, and usually make up a larger part of your annual return, the longer you hold on to them.

For example, if you had bought Wal-Mart (WMT) in April 1990, your current yield on cost would be about 19%. That means you’d be collecting 19% of the value of your original investment every year from dividends alone. If you’d invested $10,000, you’d now be collecting about $1,900 in dividend payments every year.

With investments like these, it’s best to let your money work for you as long as possible.

That can mean riding out some tough times. Wal-Mart declined 23% during the 2000 bear market, for example. Selling as the stock declined would have saved you some money in the short term, but you also would have forfeited that 19% annual yield.

When buying dividend stocks, you have two options. You can either collect the quarterly income or reinvest it to buy more shares. The latter is called a Dividend Reinvestment Plan, or DRIP, and is an easy way to increase the value of your position without having to do much.

To help you find the best dividend stocks, we offer two dividend services at Cabot Wealth Network. Those are the Cabot Dividend Investor, a service that has beaten the market since its February 2014 inception, and Cabot Income Advisor, an advisory that combines high-yield dividend stocks with covered calls options trading to earn more income. Both advisories are run by our dividend investing expert, Tom Hutchinson.

Dividend Stocks Post Archives
In comparing Coke vs. Pepsi stock, neither soda giant will blow you away. But over the long haul, both are uncannily reliable. Which is best?
High yields and safety are at a premium in today’s never-ending bear market. Here are three stocks that feature both, according to Sure Dividend.
Oil prices have declined significantly in the last year and that’s leading to a big opportunity in dirt-cheap energy stocks.
McDonald’s isn’t the dominant growth story it was. But McDonald’s stock continues its steady performance - and a breakout may be coming.
The best DRIPs are the kind of safe, long-term income stocks you want to give your grandchildren for their birthday. Here are 3 that I like.
With no steady paycheck, investing after retirement can be daunting. Here are a couple key strategies to make your money last.
If consistent cash in your pocket isn’t reason enough to own monthly dividend REITs, here are some other attractive features of this type of investment.
In a low interest rate environment, these five investing tips can help fortify the portfolio of any income investor or retiree.
More than 75% of the S&P 500 pays a dividend these days. Here are the 10 highest-paying dividend stocks in the index.
A retirement savings calculator isn’t an exact projection, but it can be a good starting point when planning for retirement.
Investing in a business development company is a high-risk, high-reward proposition for income investors. But you can mitigate risks.
In an increasingly volatile marketplace, safety has become a must for any portfolio. With that in mind, here are the best safe investments.
Reliable monthly dividend stocks can be a valuable supplement to other income, and these 3 offer strong yields and sustainable payouts.
Special dividends are like surprise money for shareholders, though you can also seek out companies that are about to pay them. Here’s how.
Manufactured home communities are growing rapidly and these three housing REITs and two builders are capitalizing on the trend.