Dividend investing is an extremely popular way to invest money into the stock market, and for good reason. It is an easy way to make some extra cash flow off of money you already have. Here is how it works, you buy a few stocks or ETFs that are paying out a nice dividend and then hold onto them for the long term collecting the passive cash flow it produces.
You do not need to find stocks that will make a large gain over the long term to make money with this strategy. As long as the stock stays flat it can be a powerful way to invest.
There are a couple benefits of this strategy. For starters, it is a great way to make passive income. All you really need to do is to buy some dividend stocks in strong companies or a few big strong dividend ETFs and hold onto them for the long term collecting the monthly dividends they give off.
It is a powerful way of making a little extra passive income. If the stock is backed by a strong company that is unlikely to fail the dividends are going to be pretty steady and will probably last forever.
However there are also some disadvantages to this strategy. For starters, it isn’t the most profitable way to invest money. Stocks that pay dividends typically pay out annual returns of 2-15%. While it isn’t hard to find a stock beating inflation with just dividends you do need a lot of money in order to make a decent income from this strategy.
For instance if an ETF pays off a dividend of 6% and you want to make $60,000 worth of passive cash flow you would need to invest $1,000,000 into it to do that.
There are other stock market strategies out there which are more powerful and can help you achieve a larger return. The only problem is that they take a lot more work and can take a while to get the hang of. Dividend investing may not be the best way to grow your money over the long term, but it can be a terrific way to make some income off of money that you already have. It is a passive way to beat the returns of most other investments such as CDs and treasury bonds.