Benefits of Dividend Investing
Dividends: Payments a company makes to its shareholders by distributing a portion of its profits
4 Benefits of Dividend Investing
- Income: Receive a steady stream of dividend income on a quarterly basis
- Total Return: Dividends contribute to the total return of a portfolio. Total return is comprised of both price appreciation (growth of the stock) and the dividend received
- Dividend Growers: Companies that regularly increase their dividends can help investors keep pace with inflation over time
- Tax Efficiency: In taxable accounts, eligible Canadian dividends receive preferential tax treatment through the dividend tax credit
Questions to ask:
- Is the dividend sustainable?
- Could this be a value trap?
Investment decisions should be made in the context of your financial plan and your current financial situation.