Income stocks are considered to be good investment options as they generate a secure ongoing stream of regular income for the duration that the stock is held. Hence, such stocks can be an excellent option for risk-averse, long-term investors.
Investors often look for quick money-making alternatives by investing in stocks and achieving fast capital appreciation through increases in share prices. However, the risks involved in the selection process – unexpected stock price declines, market selloffs and elevated tax costs on short-term investments – are often overlooked.
Why Dividend Investing?
Dividend investing is prudent as dividends are a less risky component of total return than capital appreciation. Also, dividend stocks are historically less volatile than non-dividend stocks. Moreover, they reflect a company’s solid financial structure and strong fundamentals.
Whether it’s an up market or a down market, there’s always a place for dividend investing. Here’s why: The yields on dividend stocks rise when their share prices go down. That’s an opportunity to chase extra yield. On the flip side, if the market is escalating upwards — that’s obviously good for all equities. Hence, it can be easily said that dividend-paying stocks are always appropriate for long-term investors.