Monthly dividend stocks are rare, but can provide additional compounding leverage for the holder over time.įinally, dividend stocks offer significant liquidity advantages over other forms of passive income, which means the holder can buy or sell quite easily, and in whatever dollar amount suits them. When thinking of alternatives to generate passive income – such as real estate – that’s a huge advantage.ĭividends are generally paid quarterly for most stocks, but some pay monthly as well, so that’s a consideration for the shareholder. This means that investors can buy dividend stocks with very low capital requirements, and build their position over time.
Unlike real assets, dividend stocks can be bought or sold easily each market day, generally for a very low cost. Second, the dividend stock provides a predictable income stream the investor can use to fund living expenses, or simply buy more stock to generate even more income. These are companies that use spare cash to return directly to shareholders, rather than buying back their own stock, making an acquisition, or simply keeping that cash on the balance sheet.ĭividend stocks, therefore, offer investors two ways to compound their wealth.įirst, the value of the stock can rise, just like a stock that does not pay dividends.
In short, dividend stocks are an easy, capital-efficient way to generate income for investors.
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