Why would an investor choose dividend stocks over growth stocks?
Since our recent stock market crash I have become a big fan of dividend paying stocks for one big reason. At the end of a crash or market fall I still have something to show for it. I've seen my 401k and IRAs fall to where I started. I would have made the same amount of money if I stored it under my mattress.
With a growth stock the price can go up and down but you still have the same number of shares. With a dividend paying stock you at least get paid something along the way and even better... if you reinvest the dividend into extra shares it will start compounding.
I would guess because that investor does not have enough cash to take a position in both and feels that a bird in the hand is worth two in the bush.
There is a place for growth stocks and a place for dividend stocks in one's portfolio. There's also a place for options, ETF's, IDSs and REITs. It's not a matter of one or the other.
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