Part 2/7:
Dividend investing is not about chasing the latest "rocket ship" stock with the promise of exponential growth. Instead, it focuses on investing in reliable companies that pay dividends, thereby sharing profits with their shareholders. A dividend can be described as cash or shares distributed to shareholders regularly, rewarding them simply for holding their shares. This makes dividend investing a passive income-generating strategy, allowing investors to earn money without actively trading stocks.
The Objectives of Dividend Investing
The primary goals of dividend investing are twofold:
- Earning Passive Income: Investors can withdraw cash dividends and use them as income. This is straightforward and appealing, especially for those looking to supplement their regular income.