3 Reasons You Should Be Invested In Dividend Stocks Right Now

If you’re still standing on the sidelines in cash at the moment, here are three good reasons that you should be invested in stocks right now.

  1. An investor’s choice of asset allocation is the single largest factor that will influence the probability of long-term success. Historical evidence suggests that cash investments return the least amount over the long run.
  2. There is significant upside potential in equities for long-term investors right now. Stock valuations are well below their highs and have a long way to go to be back in line with what we consider to be fair value.
  3. Sustained low interest rates and dramatic increases in money supply combined with increased deficits have many fearful of the inflationary impact once a true economic recovery takes hold.
    Money market investments, non-market linked CD’s and high interest savings accounts offer little protection against the wealth eroding effect of inflation.

That is not to say that there is no downside.  In fact, there is an inherent risk when investing in equities and there may, in fact, be another leg down.

However, I believe the risk vs. reward payoff  favors the astute dividend growth stock investor at this time.

8 comments

  1. DGI,
    I’d have to see the research you are talking about, but anytime you pick a time period to compare stocks vs. bonds it can be skewed by the time period measured.
    We’ve recently heard about the “lost decade” as indexes measured to the bottom at March 2009 showed the same levels as 10 years earlier. However, if we look at our focus on dividend paying stocks we far and above exceed the index due to the impact of dividends paid and/or re-invested over the past 10 years.
    Stats can say anything you want them to depending on how you measure and interpret them.

  2. Thanks for the bull case- after the recent run up I’ve been pretty wary for a progressive pullback, but you’re right on the long haul this is an excellent spot to accumulate and hold for the long haul.

  3. This is a good post, but where did you get this information from? “Historical evidence suggests that cash investments return the least amount over the long run.” What is this historical evidence?

  4. Thanks – I was looking at my portfolio last night and thinking ahead to the end of the month – what investments I’ll make, etc. – some of my favourites are still 25% below their 52-week highs. It still would be nice to see a bit of a pullback, though, for jumping in.

    Would be interesting to see your thoughts on the Canadian dollar and future US inflation right now.

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