I’m happy that there have been no market dramas in the last few weeks. The S & P 500 is trading in one of the narrowest areas I can remember, with no major earnings announcements planned, and even Twittersphere is quiet. It’s been a while since Elon Musk launched a new memestock or crypto boom …
Anyway, such a late news day is worth it. They give us the opportunity to break through the noise of the market and focus on the big picture for our long-term interests. Twenty years from now, toddler tweets from musk would be less important. Ultimately, making us successful or destroying us is the basis of our investment.
Now let’s take a moment to talk about dividend investment today. I’m not going to endorse stocks, and I’m not going to mention recent dividend declarations. We will be higher than that and cover why dividends make the difference between retiring in style and not retiring at all.
3 The Truth About Dividend Investment
Better kind of company
I loved Wolf of Wall Street.. Yes, it’s vulgar, and I don’t get life or investment advice from Jordan Belfort. But he had a quote I like:
“Money doesn’t just buy you a better life … it also makes you a better person.”
Well, maybe it is, maybe not. But I would like to argue that dividends will be a better kind of company. This is the reason.
It’s hard to obscure the numbers when you have to generate cold, hard cash to pay dividends. Even companies that don’t completely lie to their financial reports regularly expand or obscure the truth. A talented accountant can make your reported income what you want. But they can’t realize cash from thin air. In order to pay dividends, the company must have cash to do so.
This means that the obligation to pay dividends encourages more honest reporting and reduces annoying surprises in the future.
You are the boss
Dividends also enforce discipline and tailor management to the needs of shareholders.
Everyone knows that the basic purpose of a company is to enrich its owners, the shareholders.this is capitalism 101. But there is an “agency issue”. The best interests of the owner, or shareholder, are not necessarily the best interests of the owner who runs the company.
CEOs are known for injecting money into pet projects, overpaid packages, and wasted empire construction. Paying dividends to shareholders keeps the temptation away from them, at least to some extent, and forces them to put shareholders first.
After all, you (shareholders) are the bosses of the company. Not a talking guy in a suit sitting in the corner office.He is working for You are And sometimes you need to remind it.
Dividends also give you the ability to make a profit without selling your stock. This is less important for short-term transactions. But if we’re talking about a good company you want to own for years or decades, receiving dividends allows you to enjoy the results of your investment without having to sell off your stock.
I love capital gains. But each stock you sell to meet your living expenses is no longer available for growth and synthesis.
By being paid in cash dividends, you can carry long-term winners … perhaps for decades or even generations.
Dividend investment income
Not all good companies pay dividends and non-payers should not be automatically excluded. Doing so would have eliminated some of the biggest growth stories of our lives, such as Amazon.com and Alphabet (Google).
But I strongly believe that most of your long-term portfolio should be solid dividend payers. They are a better kind of company that makes you a better kind of investor.
For safe benefit
Editor, Green Zone Fortune
Charles Sizemore Is the editor of Green Zone Fortune Specializes in income and retirement topics.Charles is a regular Bull & Bear Podcast.. He is also a frequent guest on CNBC, Bloomberg and Fox Business.
3 Powerful Dividend Investing Truths for Your Retirement Plans Source link 3 Powerful Dividend Investing Truths for Your Retirement Plans