Should I invest in Dividend and Growth Stocks?
Investing in growth stocks is a great way to build wealth. A growth stock will increase the value of your investment over time, whether you hold on to it or sell it. Dividend stocks are another type of investment that many investors choose. However, when comparing growth stocks and dividend stocks, which is better? In this blog post, we discuss the benefits and drawbacks of each one so you can make an informed decision about what kind of stock suits your needs best!
What is a dividend stock, and what is a growth stock?
A dividend stock is a company that pays out a portion of its profits to shareholders in dividends. So instead of re-investing their profits back into the company to focus on growth, we investors get rewarded monthly or quarterly dividend payout.
On the other hand, a growth stock is a company whose share price increases over time as it grows and becomes more profitable. Instead of rewarding investors with dividends, growth companies reinvest their profits focusing on areas such as research and development among others.
The benefits of owning dividend stocks
Standard benefits:
– You’ll have a steady stream of income through the dividends.
– Your contributions and profits are being reinvested in the company.
– Tends to be less volatile than growth stocks with a stronger balance sheet.
Emotional benefits:
– You’ll feel more secure with dividend stocks than growth stocks because they are less volatile, especially in a lousy market.
The benefits of owning growth stocks
Standard benefits:
– You’ll have the potential to make much more money in growth stocks than dividend stocks.
– Owning growth stocks can help build wealth much more quickly.
Emotional benefits:
– You’ll feel like you’re on top of the world when your growth stock skyrockets to the moon and you’ve made a ton of money off it!
How to decide which type of stock is right for you
When thinking about dividend and growth stocks, the two most important things to think about are your financial situation and your needs.
If you want a steady income stream, dividend stocks may be better for you. If this is the case, you should invest in dividend companies with a proven and reliable history of paying dividends.
Growth stocks can be a great way to make more money more quickly as the share price increases for those who don’t mind getting a little riskier with their investments. However, it’s also important to remember that growth companies can go downhill just as fast.
It’s essential to do your research and decide which type of stock is right for you!
Examples of well-known dividend and growth stocks and how to start investing
Some well-known dividend stocks include Coca-Cola, Pepsi, IBM, and Microsoft. Some well-known growth stocks include Amazon, ChargePoint, Nvidia, and Google.
You can start investing your money in dividend and growth stocks using M1 Finance here or WeBull here, and you can get free cash or stocks using those referral links! And while you are here, check out this weekend’s Dividend Portfolio update above, and our weekly Growth Portfolio update below.
