A Penny Saved

Many of us invest in stocks.  Some of you invest a lot and others invest very little like myself.  But what it all comes down to for all of us is making money on our investment.  And that’s why, to this day, I tout the benfits of a dividend paying stock.  Not only do you get any appreciation in value on the stock, they pay you to be a stock holder as well!

Here’s a handy dandy little graph courtesy of The Dividend Guy blog.

Take a very close look at it.  It graphs the historical returns of stocks.  The grey line is the historical return of stocks that does not take dividends into account.  The green line is the return of those with dividends added in.

Note the large disparity between the two.  I would imagine that that disparity would get even larger if you took into account dividend reinvestment.

Dividend reinvestment is amazing.  Not only does the company pay you to be a stockholder, they use that money to buy more stock for you.  It’s dollar cost averaging with no dollars from you.

Of course, it’s important to remember that not every stock that pays a dividend is a good stock investment.  But on average, if a stock pays a dividend, they perform better and generally are sounder investments than those that do not pay dividends.

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