- In a troubled market, dividends provide investment stability: While everyone else is panicked about their portfolio's decline, dividend investors see a downturn as an incredible buying opportunity.
- Unlike earnings, dividends can't be manipulated or faked: From an accounting standpoint, it is relatively easy through fraud and manipulation to make an income statement look quite impressive. There is no faking the cash that shows up in your brokerage account.
- Dividends provide continuous feedback: As time passes dividend investors see their income steadily grow. You do not have to wait five to ten years to determine if the strategy is working. Each dividend and dividend increase provides the investor with reassurance that the strategy is working.
- Reinvested dividends provided a significant portion of the historical equity returns: Performance in any given year is driven by capital appreciation, but long-term returns are largely the result of reinvested dividends.
- Good dividend companies grow their dividends: You expect your employer to give you a raise periodically. Why wouldn't you expect the same from your investments?
- Spending dividends in retirement, does not harm your principle investment: In addition, a good dividend portfolio can be left to your children and their children.
- A dividend portfolio is relatively low maintenance: You may not want to spend your retirement managing and worrying about your portfolio.
Full Disclosure: No position in the aforementioned securities. See a list of all my dividend growth holdings here.
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