Dividend stocks have produced strong total returns over the years from "summary" of The Little Book of Big Dividends by Charles B. Carlson
Dividend stocks have a long history of delivering attractive total returns to investors. These returns are not just satisfactory, but often quite impressive when compared to other types of investments. The key to understanding the power of dividend stocks lies in their ability to provide two potential sources of return: dividend income and capital appreciation. Dividend income is one of the most compelling reasons to invest in dividend-paying stocks. Many investors rely on this regular income stream to help fund their living expenses, especially during retirement. Dividend payments are typically made on a quarterly basis, providing investors with a steady stream of cash that can be reinvested or used to cover expenses. In addition to the income generated from dividends, dividend stocks have also shown strong capital appreciation over time. While the stock market can be volatile in the short term, dividend-paying stocks have historically outperformed non-dividend-paying stocks over the long term. This is due in part to the fact that companies that pay dividends tend to be more stable and financially sound, making them less prone to sharp declines in value. Another advantage of dividend stocks is their ability to provide a hedge against inflation. As companies increase their dividend payments over time, investors can benefit from rising income streams that help offset the impact of inflation on their purchasing power. This can provide a valuable source of stability and growth in an uncertain economic environment.- The combination of dividend income and capital appreciation has proven to be a winning formula for investors seeking strong total returns. By focusing on quality dividend-paying stocks with a history of consistent performance, investors can build a diversified portfolio that has the potential to deliver attractive returns over the long term.
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