When it comes to investing, it’s important to have a diverse
portfolio. This includes a mix of value and growth stocks. Value stocks tend to
be shares of large, mature companies. Growth stocks tend to be shares of young
companies whose share-price growth outpaces that of the market average. Most
people think of technology companies when it comes to growth stocks.
The closer you get to retirement, the more your portfolio
should be rebalanced to include a higher portion of value stocks. They provide
solid long-term price appreciation and, often, dividends.
Dividend stocks are an important part of investment portfolios,
especially stocks that have a long history of payout increases. The mere fact
that a company pays dividends shows that it’s making money and is able to
return a portion of its earnings to investors.
Investors who are looking to enrich their portfolios with
reliable, growing dividend stocks should consider dividend aristocrats or
dividend kings. They’re some of the safest dividend stocks on Wall Street.
A dividend aristocrat is an S&P 500-listed company that
has raised its dividend annually for at least 25 consecutive years. Not only do
dividend aristocrats raise their dividends every year, but their shares have a
history of outperforming the broader market.
A dividend king is a company that has raised its dividend
for at least 50 consecutive years. They don’t need to be listed on the S&P
500 to be considered a dividend king, but many of them are.
Companies that have raised their dividends for decades tend
to have rock-solid operations and balance sheets. Moreover, they make lots of
money, no matter what’s going on with the economy, whether it’s rising interest
rates, soaring inflation, recessions, stock market crashes, pandemics, war—you
name it. Investors can rely on these companies to give them annual pay raises,
and this is in addition to any underlying growth in the company’s share price.
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