What You Need to Know About a Dividend Strategy
If you’re trying to learn all that you can about investment management, you’ll want to know more about dividend investing. In case you’re not already aware, this strategy is known to be one of the best ones on Wall Street.
A Closer Look at Dividend Investing
What Exactly is a Dividend Strategy?
Dividend investing is sometimes called “growth & income” investing. Although dividend strategies may vary, all of them are all about investing in businesses that pay a dividend. Furthermore, they use these dividends to reinvest. When it comes to the selection of investments, this strategy focuses on high-yielding and high-quality stocks so that the investor can have the potential to get a steady stream of income from the dividends. This type of investment selection process also allows the investor to have opportunities for market appreciation if the stocks that they selected rise in terms of value.
What is This Strategy Based On?
This investment strategy was based on the once-popular “Dogs of the Dow” theory. One of its specific techniques involves buying 30 Dow stocks that produce the highest yields on January 1st of each year and re-balancing them every year. The idea was to have a portion of the investment returns to come from growth in the share price while another portion would be coming from the dividends. However, when the dividend tax rates became higher in the 1990s, businesses shifted their focus on share buybacks in order to return the capital to the investors.
The dividends became popular again when the market collapse caused countless high fliers to go out of business. Once again, getting dividends became more appealing to investors because the tax rates were cut on them.
Learn More About Investment Management
If you want to get more information about investment management, get in touch with the financial experts at 1879 Advisors. Our complimentary portfolio consultation can give you the opportunity to receive a comprehensive analysis of your existing portfolio holdings and specific recommendations.