Investors investing in stocks primarily look for capital gains, which may not be a problem when markets are going through an uptrend. In fact, the less risky stocks including those that pay dividends, may look dull compared with riskier stocks in an up market scenario when the latter are poised to provide comparatively higher returns. However, with the lack of a clear trend in market movement, dividend stocks have lately been drawing investor attention. Dividend investing also provides an excellent opportunity for investors who give precedence to steady income over high-risk returns.
Why Dividend Investing?
The potential to provide stable returns is the key feature of dividend investing. A company with a consistently strong dividend yield is believed to be financially stable and poised to offer steady returns over a significant timeframe. On the one hand, returns from dividend payments supplement gains from rising share price; one the other hand, dividend income helps to limit losses incurred during a market downturn.
Moreover, companies with healthy dividend yields are likely to continue dividend payments as they try hard to keep impressing their investors. Plus, the popularity of dividend investing has grown over the past few years on the scope to reinvest returns from dividend payouts in additional shares of the company. Naturally, the strategy is an income-generator even in a volatile market.
Here are 5 stocks...
Source: Zacks Investment Research
