Believe It or Not, These Stocks Pay You to Own Them

Key Points

Dividend stocks can be a smart way to generate passive income.

There are a few things to consider before you buy, though.

Choosing the right investments is key to building a strong portfolio.

Choosing the right investments is critical to building a healthy portfolio, but that can sometimes be challenging when there are seemingly endless stocks and funds to choose from.

The types of investments you choose will depend largely on your investing style and tolerance for risk. Some people may prefer buying individual stocks, for example, while others prefer mutual funds or exchange-traded funds (ETFs).

Regardless of your preferences, though, there’s one type of investment that actually pays you to own it: dividend stocks. Image source: Getty Images. What are dividend stocks?

When a company starts earning a profit, it has several options for how to allocate that money. Some businesses choose to return a portion of their profits to shareholders, and that payment is called a dividend.To earn dividends, all you have to do is invest in a stock that pays them. Most dividend stocks make payments either quarterly or annually, and you’ll earn a small amount for each share you own.By investing consistently, you could potentially generate a source of passive income with dividend stocks. While each individual payment may be small (generally only a few dollars per share), when you own hundreds of shares after a few decades of consistent investing, those payments add up quickly.One of the best perks of investing in these stocks is the ability to reinvest your dividends . With this strategy, rather than cashing out your payments, you can reinvest that money into more shares of that particular stock. This can help grow your portfolio exponentially. The more shares you own, the more you’ll collect in dividends. And the more […]

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