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 a low interest rate environment, these five investing tips can help fortify the portfolio of any income investor or retiree.
The bullish start to 2023 has many investors optimistic that we’ve avoided the Fed’s “hard landing” scenario. Here are two stocks that can do well in either case.
Dividends are a useful way to add yield to your portfolio and these three dividend-paying stocks look good for 2023.
A retirement savings calculator isn’t an exact projection, but it can be a good starting point when planning for retirement.
More than 75% of the S&P 500 pays a dividend these days. Here are the 10 highest-paying dividend stocks in the index.
Any income investor should know how to reinvest dividends. Whether you should depends on what you’re looking for as an income investor.
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.
How long do you have to own a stock to get the dividend? The answer isn’t complicated; there are just a few things you need to know.
Special dividends are like surprise money for shareholders, though you can also seek out companies that are about to pay them. Here’s how.
Master Limited Partnerships (MLPs) are among the few palatable places to invest right now. Here are three of the best MLPs, according to Sure Dividend.
Reliable dividend stocks may seem obvious and boring. But if you buy them and hang on, they can make your future. These five stand out now.
Despite a broadly solid market, dividend payers lagged in 2021, but things are looking up. Here are 4 conservative dividend stocks for 2022.
Growth is difficult to come by in this market. Growth and income are even harder. The three best income stocks combine both elements.
Water, the most abundant resource on the planet, is becoming increasingly scarce in certain parts. These water stocks and ETFs are thriving.