Dividend Stocks: Not Just For Passive Investors

I've been hearing a lot of arguments being tossed around about how dividend stocks are primarily the domain of passive/uneducated investors or weak companies, so I thought I'd write down some of my own thoughts on this issue. I understand where the anti-dividend crowd is coming from: I used to be one of them. A long time ago, I believed that dividend companies were for the risk-averse and elderly. Agile investors with a healthy appetite for volatility could crush the market only by aligning their fortunes with young companies growing like weeds, with the wind at their back and their best days still ahead.

I was wrong. I've moved far away from the days when I saw dividend stocks as exclusively widow and orphan concerns, though I don't count myself as an income investor just yet. A dividend shows management concern for shareholder interests, it forces managers to be more efficient in their capital expenditures, and it hedges against the depreciation of cash assets on the balance sheet. But most importantly, dividend stocks are not just for passive investors who prefer to take a hands-off approach to investment...in fact, it's the exact opposite.

Source: Seeking Alpha

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