We are a group of investors who believe in spreading a message – that financial literacy and sound investment knowledge can help people around the world achieve financial independence and lead better lives for themselves and their loved ones.
Dividend One is born of that mission.
Why Dividend Investing?
It’s simply because dividend investing is one of the best ways to generate stable investment returns and passive income with relatively low risk. Dividend-paying companies are typically large, well-established companies with a proven business model, and provide a source of income in addition to capital appreciation.
Strong Capital Appreciation
Historically, when it comes to generating returns, dividend stocks have always been one of the best-performing asset classes.
Ned Davis Research and Hartford Funds published a study that showed that, between 1973 and 2021, stocks that consistently increased their dividends outperformed the rest of the S&P 500 index for capital growth. For every $100 invested, dividend investors gained $14,405, while non-dividend payers only gained $989.
Steady Stream of Income
Dividends provide a regular source of income that can weather periods of market turbulence. Even if the stock market is down, we can still receive payments from the dividend stocks. This income can even help us buy more stock during the downturn and profit when the market recovers. This makes dividend stock an attractive investment for those seeking to generate a steady income stream. And is especially true for anyone who hopes to retire one day.
Dividend Compounding
One of the best things about dividend investing is DRIP (dividend reinvestment plan). By reinvesting our dividends, we are essentially earning more money on our money by buying more stock, which leads to even more dividends in the following years. Over time, this can lead to compounded growth in the investment portfolio.
Less Risk
Dividend-paying companies tend to be large and well-established, with a history of profitability and cash flow. This makes them less likely to experience the kinds of sudden drops in value that can occur with smaller, newer companies. Most dividend-paying companies also tend to be more conservative with their spending and are more likely to maintain strong balance sheets and generate consistent cash flow to maintain their dividend payments.
Success leaves footprints. Instead of reinventing the wheel, research has shown that dividend growers offer higher-annualized returns (10.1%) while displaying the lowest volatility, making these securities safer for investors – especially for those who prefer a good night’s sleep. So for the cautious investor, dividend stocks are always a good pick for any investment portfolio.