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The Advantages of Dividend Stocks

Updated on February 4, 2012

There are many extremes to the stock market and investing in it. It can be one of the most intensive experience to watch the stocks you love go down in price, but an hour later reach new highs over the price you bought it at. One of the ways that people use the stock market to their advantage in looking for passive income is with dividend stocks. There are so many advantages that come with having dividend stocks in your portfolio let’s take a look at a few of the advantages.


Dividend stocks can be used as a source of income for investors. When you purchase a dividend stock they will pay you a certain amount per share on a regular basis. This basis can be in Monthly, quarterly, or yearly dividend sum. So, instead of waiting for the stock price to rise or fall you are already invested in one and making money at it. With the ability, to have realized gains much sooner and not having to liquidate your investment your income will start to grow.

Out performance

The ability for dividend stocks to outperform other types of investments in the stock market has helped them grow in popularity. They have offered investors with a consistent return on their income regardless of the markets emotional ups and downs. The whole dividend yield payout can be added to the stock value and instantly add an extra 5% extra return in any portfolio. If, you continue to invest and keep adding to the dividends it can add up to hundreds over the course of a few years.

Capital Appreciation

Many of the companies that are often associated with dividend stocks are still growing. They have proved over and over again that the growth of stocks is not limited to the dividend. The dividend stock value is often a stock that is consistently going up in value. So, they are an attractive ti fixed income investors as well the dividend is just a bonus.

Margin of Safety

Dividend stocks are usually a safer bet than more traditional companies. That is the companies that are paying out dividends are larger companies. Larger companies have been around for a terrific deal longer and have a much more profitable asset portfolio then smaller companies. Even fund managers that are invested in multiple types of dividend stocks do well because of the strong growth of these established companies.

So, if you are looking for away to increase your portfolio returns and take advantage of additional income. Look into investing into dividend stocks to give your Passive income another stream of income.


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  • profile image

    richardgere 5 years ago

    Nice article. Advantages of dividend are authentic and easy to know. Please do share is there increase or decrease the revenue of dividend & what is effect on dividend investors.

  • samsons1 profile image

    Sam 5 years ago from Tennessee

    Good hub and explained so well. Wish I had invested earlier in life. It's good to see others plan wisely though. Voted up and interesting...

  • putnut profile image

    putnut 5 years ago from Central Illinois or wherever else I am at the moment.

    Since 2008 dividend stocks have been the only way to go, really. I only wish I had bought some before then, as my capital is locked up until things head north.

  • Russell-D profile image

    Russell-D 5 years ago from Southern Ca.

    If you're on a fixed income like Social Security, pull all your other assets together and buy Dividend paying stocks - you earn and have stock growth if you choose wisely. Example ATT - a steady long term growing stock pays a 6% dividend. Enterprise Products now selling at 49 is predicted to go to $55 this year and pays 5%+Dividend. Want less risk, look to Heinz type names you know. Just do a little home work and use a low priced broker for your buys. The dividends will give you more spending money quarterly. David Russell