Long-term investing through dividend stocks has been a reliable method to help build wealth. If you’re investing with the goal of providing retirement income in the future, dividend stocks offer an interesting option for your equity allocation. These stocks tend to be issued by high-quality companies that are well-established in their industries and appear to be here for the long haul. One caution, though: Dividend stocks are not considered growth securities. They’re all about income growth over the long haul.
In the U.S., interest rates have remained relatively low for about a decade — since the Great Recession. Low rates are a problem for conservative bonds, traditionally a preferred investment for retirees. Because of low income yields, retirees have sought supplementary income from more aggressive holdings. One such security is the dividend stock.
The typical profile for a dividend stock investor is someone seeking income payouts over the long term, with principal preservation and modest growth. [Read more…]