Dividend Investing
Build passive income through investing in dividend-paying stocks and funds.
Overview
Dividend investing involves buying stocks or funds that pay regular dividends, creating a stream of passive income. While it requires capital upfront, it is one of the most reliable long-term wealth-building strategies.
How to Get Started
- 1Open a brokerage account (Fidelity, Schwab, Vanguard)
- 2Study dividend investing fundamentals and metrics (yield, payout ratio)
- 3Start with dividend ETFs like VYM, SCHD, or VYMI for diversification
- 4Reinvest dividends (DRIP) to compound growth
- 5Gradually add individual dividend stocks as you learn
Pros
- True passive income
- Compound growth over time
- Tax advantages in retirement accounts
- Less volatile than growth stocks
Cons
- Requires investment capital
- Returns are gradual
- Dividend cuts can happen
- Opportunity cost vs. growth stocks
Recommended Tools & Platforms
Pro Tip
Focus on companies with a long history of increasing dividends (Dividend Aristocrats). A portfolio yielding 4% on $100,000 generates $4,000/year in passive income, growing annually.
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