Day-Trading Producing Losses? Consider Dividend Investing

Dividend investing has been a viable strategy for a number of years, but many people still overlook it. The majority of people like to day-trade and usually end up losing money. If this sounds familiar, you may want to consider dividend investing as a primary strategy for your portfolio. The concept of dividend investing is quite simple. You buy shares of stock in a company that pays out dividends to its investors. Instead of selling the stock when it goes up, you hold it in hopes of collecting the dividend. This can provide you with a steady stream of income and a consistent return. 

Why Dividend Investing?

Investing in dividend stocks is enticing for a number of different reasons. First, it gets you a regular payout from the stock without having to sell it. If you are after residual income, this could be a way to go. You can simply take the payment or you can reinvest it back into the market in some capacity. If you choose to reinvest, this can substantially grow your portfolio over the long-term. 

Another reason that this strategy has some appeal is that you do not have to worry about the price of the stocks themselves. You are not selling the stocks, so it does not matter if they have gone up or down significantly. You are making your money off of the dividends that are paid out. Therefore, you are going to get something out of the stock regardless of whether you pick a stock that goes up in value. This consistency is great for many investors that do not want to rely on the rapidly changing market for their future financial goals. 

Compared to Day-Trading

Many investors have started to get away from the day-trading mentality and started to use the dividend investing strategy. The difficulty in producing regular returns through day trading has been a major reason that investors are getting away from day trading. With a dividend investing strategy, you can get anywhere from 3 to 6 % return on your investment. While that might seem like a low number, it is a lot better than the vast majority of traders do. There are some great investors out there that really know what they are doing and make large sums of money investing. However, they are in the minority. 

As much as 85% of investors do not beat the S&P 500 index on a yearly basis. That would require you to correctly pick several different stocks that are going to do well from each industry. The likelihood of being able to do that is not very high. 

When you employ a buy-and-hold strategy with dividend stocks, you do not have to pick the highest performing companies from several different industries. You could just buy a few good, dividend stocks and still get your return at the end of the year. This strategy makes a lot more sense for most investors than day-trading does in the long term. 

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