Part 6/10:
Common Mistakes in Dividend Investing
Traditional Approach Flaws
New dividend investors often start by prioritizing high yields and safe, recognizable companies without analyzing deeper financial metrics. This approach can lead to a concentrated portfolio that suffers during economic shifts or sector-specific downturns, exposing weaknesses related to sustainability and growth.
Yield vs. Growth
It's crucial to differentiate between yield and dividend growth. High current yields may seem attractive, but if a company has not raised its dividend in years, it may signal a stagnant business model. Instead, focusing on companies that consistently grow their dividends can lead to more favorable long-term returns.