Advisers
tell you to buy stocks that pay dividends as a defensive measure in
down markets. That makes sense because you get substance that helps
keep such stocks afloat when the light-weights are dropping like lead
balloons.
The unmentioned problems occur when the dividends disappear or aren’t consistent. That happens when down-markets result from bad economies.
Another positive factor with dividends: When they’re reinvested periodically, as part of a low-cost fund, the investor gets the positive effect of the duration principle that’s available also with high-return bonds. My comments on duration will explain this. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
The unmentioned problems occur when the dividends disappear or aren’t consistent. That happens when down-markets result from bad economies.
Another positive factor with dividends: When they’re reinvested periodically, as part of a low-cost fund, the investor gets the positive effect of the duration principle that’s available also with high-return bonds. My comments on duration will explain this. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
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