Dividends Anyone?
Dividends, in my humble opinion, are a great thing. After all, I’ve followed a bit of how world famous investory Warren Buffett, the head of famed conglomerate Berkshire Hathaway, invests, and much of the companies he invests in (mind you, long haul), do pay some sort of dividend.
Dividend investing probably isn’t for those who want a fast growing, quick money type of stock, like the next Google or IBM, or Marvel or heck, Berkshire Hathaway, but they are for people who want a solid, respectable and usually fairly reliable source of steady income over the years they invest for their golden retirement, rather than the risk of losing it all. This doesn’t mean that all dividend stocks are safe, or even steady for that matter, but a lot of the bigger companies like GE and PG (Procter and Gamble) are good solid dividend payers that grow steadily over the years and usually render a nice little return after years of investment.
I for one have have burned on investing in what I thought was going to be the next best thing, and without dividends as an incentive to stay in the stock, I quickly bailed when I realized that the majority of my capital, if not all of it, would be compromised if I kept it in that particular stock.
Dividend paying stocks generally steer clear of a lot of this type of volatility and can often be purchased at bargain prices during recessions and other economic downturns, or heck, even when it’s going really well in the stock market, because this tends to be when people go for high tech stocks, banks and the next biggest thing in hopes of getting more bang for their buck.
It’s important to note that dividends are not always “guaranteed” though, and that dividends can disappear with little or no notice, so it may be important for you to gauge this by looking at the company’s dividend paying history to determine whether their history dictates that you are taking a good risk by buying it for the dividend’s sake.
