Edward Flores's Avatar
Edward Flores
published in Blogs
Mar 04, 2021
Why it Pays to Invest in Dividend Stocks Over the Long Term

Why it Pays to Invest in Dividend Stocks Over the Long Term

Dividend-paying stocks have a sizeable fanbase among seasoned investors. Companies that offer dividends tend to be established, consistent, and in possession of a steady cash flow, making them low-risk, low-volatility investment options. Where smaller, more volatile companies can placate shareholders with higher returns, larger companies often use dividend payouts to entice new investors and hold their existing ones.

These low-risk options may not work for every investment approach, but dividend-producing stocks can offer great benefits under the right circumstances – especially for portfolios built for the long-term. Beyond the ability to rely on these semi-regular payouts as an income stream – a strategy favored by retirees – dividends are an excellent vehicle for compounding earnings through reinvestment. While it may mean eschewing the instant gratification of immediate returns, reinvestment done properly can compound earnings far beyond the dividend payments on their own.

A Charles Schwab study of two hypothetical portfolios using returns data from S&P 500 Index and S&P 500 Total Return Index from January 4, 1988 through August 29, 2017 – each with an initial investment of $10,000, but one reinvesting all dividends and another reinvesting no dividends – neatly illustrates this point. The “hypothetical S&P 500 Index fund in 1988 would have swelled to more than $180,000 by mid-2017 had dividends been reinvested,” but taken on their own, the dividends would only have totaled $95,000.

While dividends are valuable without reinvestment, it is important they outpace or match the rate of inflation in order to maintain their purchasing power. Schwab notes the S&P 500 has managed to do this since 2012, providing ideal performance over that time span. The S&P 500 provides additional value to investors because “of the 500 large-cap stocks tracked by the S&P 500, more than four-fifths pay dividends,” making it an ideal place to both gauge performance and easily locate dividend-paying stocks.

Another option for reinvesting dividends is through a DRIP, or dividend reinvestment plan. These plans dispense with quarterly checks and instead automatically reallocates dividend earnings to purchase new shares for the investor. Most are company-run, which means commission-free purchasing power and, in some instances, the opportunity to buy shares at a discount determined by the company. While investors are responsible for taxes on the dividends – dividends that never manifest themselves as cash – DRIPs offer a win-win, giving companies the opportunity to generate equity capital while investors enjoy the benefit of convenience.

The power of compounding makes dividend stocks an attractive option for investors. While dividend stocks may not carry the allure of massive short-term returns, their ability to generate multiplying value over time means they should be a consideration for any investor’s portfolio – a slow-and-steady-wins-the-race choice that long-term investors love.

Looking for Fresh Investment Ideas? See How Algorithms and A.I. Can Help

Want to invest and/or diversify your portfolio but unsure where to start? Artificial Intelligence can help! Tickeron has developed user friendly Artificial Intelligence tools to help new and experienced investors generate investment ideas. Tickeron’s A.I. is capable of evaluating a portfolio and providing a “Diversification Score,” to tell the user how well-diversified their portfolio is. It can also generate investment ideas for a user’s 401(k) plan – even if you’re just getting started! The A.I. will give you ideas based on your risk tolerance, investment objectives, and the investment options available.

Tickeron’s new financial website is available to beginners, intermediate investors, and even experts and advisors. Explore tickeron.com today.

Related Tickers: VIG
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.