Duped by dividend stocks? Here’s why they may be a wash in your investment strategy.
On the surface, bulking up on stocks that are expected to deliver decent dividends may seem like a capital idea. Like savings and loan interest, stock dividends are relatively easy to see and measure, which can make them seem like reliable bets. Their popularity is further fueled by ongoing media coverage, touting dividend stocks’ ability to generate steady income, enhance your returns or both. The problem with favoring dividend stocks is that, while we’ve seen worse ideas, we’ve seen better ones too. When every penny of your life savings counts, why would you pursue a so-so strategy when more effective ones are readily available?