Part 5/7:
Despite their benefits, dividend stocks are not without their downsides. While these investments provide stability, they may not deliver the kind of explosive growth one might find in high-growth stocks. Furthermore, the value of dividend-payers can stagnate, offering little value appreciation over extended periods. As with any investment, market volatility presents risks; even blue-chip stocks can face downturns during broader market declines.
The Ugly
One of the harsh realities of dividend investing is that dividends are not guaranteed. Companies can and do cut dividends, especially in tough economic conditions. Such a cut impacts passive income streams significantly and emphasizes the importance of assessing the health and reliability of a dividend-paying company before investing.