Now, after writing on how to choose a good dividend stock, some of you have reached out to me asking about why they should be choosing dividend stock over growth stock and all. So I thought that was a good question, and perhaps I may share more on why I feel that investing in a dividend stock is a good option.

Now similar to the previous post, I would be coming up with 3 parts! Each part talking a point on the pros of dividend stock.

So, here we go!

Consistent Dividend Paying Companies Tend To Operate More Stable Businesses

Now in light of economic uncertainty, this cannot be more important. With wars breaking out, pandemic not fully cleared, and inflation kicking in, this aspect proves to be an important aspect

Companies that commit to a regular dividend payout to their investors need to be very confident in their operating cash flows. The longer-term visibility of their cash in and out flows allows such companies to pay regular dividends, either on a quarterly or bi-annual basis.

While some may think that dividend-paying stocks are “boring”, investing in businesses that are entrenched in their industry tends to provide some protection in a highly volatile market. We do not need long memories for this, as the COVID-19 pandemic ravaged the financial markets in 2020, and even more recently in 2022 due to the uncertainty over inflation and interest rate hikes.