Lawrence Carrel, author of “Dividend Stocks for Dummies,” advocates for dividend-heavy portfolios, saying volatile markets are a ripe time to pick paying stocks. With stock values unpredictable, investors find comfort in knowing that they will at least be paid the dividend even if they lose out on stock value, he said.
“More people want the income from dividend stocks now… they’ve had an awakening,” Carrel said. “They are not gung-ho about growth anymore.”
In his book, Carrel outlines several myths that investors harbor about dividend-paying stocks.
Myth 1: Avoid dividend-paying stocks in volatile markets
On the contrary, Carrel sees rocky times as the right time to invest in stocks where you can recoup profits without selling the shares.
“In general, it’s a little less risky,” Carrel said. “There’s the idea that if I’m going to be in an environment and I can’t be sure where the stock price is going to be, at least I will be able to walk away with profits from dividends.”
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