Dividend Growth Investing – Pros and Cons

Dividend Growth Investing is a strategy where buy stocks of companies that not only pay a certain dividend yield but grows their dividend each year.

Dividend Growth Investing

Buying shares in companies that pays dividends monthly or quarterly is a strategy that many investors favor as it provides a passive income. Dividend Growth Investing focuses on stocks that not only pay a good dividend yield, but also grows the dividend month by month.

Investors normally buys shares in companies that have a good track record of paying and growing their dividend. These are companies that make so much money that they don’t know what to do with it, so they pay it back to the owners of the company, the shareholders.

Dividend Growth Investing – Pros

  • It provides a passive income without selling your shares.
  • You can invest the dividend back into the very same company that payed the dividend, and thus increase your ownership without putting in any more money.
  • Dividend aristocrats outperforms the S&P 500 by an average of 1%

Dividend Growth Investing – Cons

  • Growth may not be up to pair with other companies that use their money on growth instead of dividends.