Monday, April 20, 2009

Dividends – Part 1 - Introduction

Dividends aren’t sexy. Most people looking for the “next big thing” want to get in on the ground floor of a start-up company and watch it (and their investment) grow to join the Fortune 500 in ten years.

This happens. Today’s Fortune 500 contains many names that had their day as high growth companies; Google, Microsoft, Intel, IBM, ITT, Hewlett-Packard, Ford, General Motors, and AT&T to name a few.

Some of them have taken a different turn lately. But for every company that achieves “Blue Chip” status many others stumble. Picking the right growth stocks is an art form to which many dedicate their careers.

Others say it’s a crap shoot - the answer is diversification. Buy them all and you will buy the successful along with the stumblebums. The long term average growth of the US stock market is around 10% per year. In some years, notably 2008, the stock market goes down. In other years it goes up much more than the 10% long term average. If you buy an S&P 500 or Extended Market index fund and hold it for 30 years you should expect between 8% and 12% compound growth per year depending on the specific start and end points.

Suppose there was a way to buy the stock of less risky, more stable companies and meet or beat the average market growth rate?

Dividends will let you do just that.

Links to the Dividend Special Report
Part 1 - Introduction
Part 2 - Reinvestment
Part 3 - Dividend Growth
Part 4 - Dividend Yield vs Dividend Growth
Part 5 - DRIP Accounts
How to Get Rich Slowly DRIP by DRIP

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