Why Dividend Stocks are Your Best Bet in Investing

Dividend stocks offer four huge advantages over other investments and should be a part of everyone's financial plan.

While investing in other stocks may offer the dream of getting rich when the investment sells, regular dividends provide something tangible you can spend or reinvest.

Dividend stocks may be one of the only valid paths to financial freedom. The safety and reliability of dividends turn you into an owner, collecting income off the assets rather than simply a renter of other people's assets.

The Power of Dividend Stocks and Compounding Returns

The out-performance of dividend-paying stocks makes sense on a financial level. For a company to pay dividends, it must make a detailed projection of its cash flow and plan for sales and growth projects.

Once a dividend is set, a company dares not cut the payment for the signal of weakness it sends to investors. For this reason, a dividend payment is a limitation on the use of cash and helps discipline management.

Dividend Stocks as an Alternative to Low Rates and an Inflation Hedge

Dividend investing has come to the rescue for many people living off the income from their investments.

Many dividend-paying companies have been in business so long that they are nearly as safe an investment as the U.S. government. Some even have a better credit rating!

Dividend Stocks Yield Provides a Safety Net

During years when stock prices fell, the average loss was 15%, but dividend payments still offered a positive 3% return.

When the market is rising, dividend stock returns are good and add to total returns. When the market is falling, returns to dividend investing are great and cushion you from more significant losses and panic-selling.

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