Value Investing News

Having narrowly missed the tech bubble bursting, I purchased my first dividend stock on December 11, 2003. I had heard dividend investments were supposed to be safer, but knew very little else about the strategy. I was fortunate enough to accidentally buy enough good dividend stocks to learn the “secret” of dividend investing.

When companies decide to share a portion of their earnings with their shareholders, it is a sign of prudent fiscal discipline. Shareholders who are rewarded on a timely basis in the form of dividend payments are less likely to sell their holdings, even during a steep market correction.

It appears many people were not confident and secure in their investing process. Many investors who lost confidence and exited the market missed the significant rally over the last couple of months.

Just as picking fruit from a mango tree does not harm it, living off dividends does not damage the investment's ability to produce future results. A mango tree's life will easily span an entire generation. Similarly, well-chosen dividend investments will not only provide income in retirement, but can be passed to your children who can continue to reap the benefits.