Get A Portfolio That Pays You During Retirement with Dividend Investing

If you own stock, you know it goes up and down on a daily basis. The price changes to whatever somebody is willing to pay for it at the time; you hope it will continue to go up, but that’s not always the case. But if it’s a company that pays dividends, it also will pay you cash that can be deposited into your brokerage or bank account. You get paid for owning that stock. At a time when you’re looking for safety and security from your portfolio, dividend-paying stocks can be a good investment. Dividend payers historically outperform other investments over the long haul, with quite a bit less volatility. And it’s nice to know that if you need to take a 4% withdrawal from your portfolio, 3% or 4% will come from dividends, so you don’t have to put all your hope in that ever-changing market. You know your portfolio is going to pay you for owning it.

The idea with dividend investing is to not over manage. Plan to stick with that stock for a long while (unless something really catastrophic happens, or there’s a change of course within the company). You don’t want 100% of your investments to be dividend payers, but there should be a good portion of your portfolio that pays you for owning it. Even if you’re not in the distribution phase yet, it can make sense to have some dividend payers in your portfolio, because then you have the miracle of compound interest: You can take those dividends and reinvest them. But especially when you’re in the income phase of the investment life cycle, when it’s all about cash flow, having dividend payers in your portfolio makes it easier to achieve success.

Source: Kiplinger

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