Aren’t dividend stocks only for retirees?
No! That’s an unfortunate misconception. As mentioned above, dividend stocks have the best historical long-term returns of any stocks—better than technology, financial, and consumer stocks, to name a few. This may seem non-intuitive, since technology stocks, for example, are normally associated with powerful growth. But it turns out that the re-investment of dividends is even more powerful over long terms. The re-invested dividends purchase more shares, which generate more dividends, which buy more shares, etc. It’s a virtuous circle. The compounding effect of re-invested dividends is how dividend stocks generate their market-beating returns. Of course, the dividends can be kept and spent. That’s generally what retirees do with them. But younger people—in the “accumulation” phases of their lives—can benefit greatly from the compounding returns available from re-investing the dividends from their stocks.
