Individual Stocks: Dividend versus Non-Dividend.

Historically time and time again Dividend Stocks have provided investors with bigger over all gains than Non-Dividend individual stocks.

Is this true?  Well yes it is if you are a long term investor that is going to buy such an individual and sit on it in your portfolio for years.  However, people that invest like me who are more interested in the short term than the long term, this may not be true. 

What is the big difference between a short term and long term investor?  The biggest difference if that you purchase a stock for the long term that pays out good dividends that you reinvest over the course of years and years.  You hit difference price points as the stock goes up or as it declines.  Thus adding more and more shares to your initial holding.  You may also be adding money and buying more of this stock you chose on a systematic basis like one a month to hit different price points and build on the number of shares you own.  With a short term investor such as myself (not day traders), dividends are of little benefit or consequence.  They are making strategic moves in the market for short term gains and benefits.  Short term investors study market trends, look for under valued stocks, and opportunities for short term gains usually 10 to 30 percent.  Sell and take their profits and look for the next opportunity or two to reinvest their money.  In the past 4 months alone I am up over 12% in my individual short term portfolio holdings.

So to break this down in a little more basic terms as to where Dividend Stocks are better than Non-Dividend stocks it really depends on what kind of investor you are and the length of time you are going to hold that stock in your portfolio.  Long Term, good paying dividend stocks with some growth potential.  Short Term, it really does not matter.  Your looking for a quick growth cycle, take your money and run to the next opportunity.

Also remember, you should be very knowledgeable about the stock market, have done your research on a stock and be willing to invest money that you could possibly lose without placing yourself into a financial whole you cannot dig out of.  For the new investor in Individual Stocks I suggest looking for a Stock Investor Group in your city or area.  They are a great way to get your feet wet and learn more about Individual Stock investing.

Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.