A dividend is the distribution of a company’s earnings to its shareholders. Dividends are an important component of the stock market's total return. When markets decline, dividends have the potential to offset losses, and when markets rise, dividends have the potential to enhance returns. Compounding interest through reinvesting dividends and staying the course with a financial plan can lead to better returns long term.
The charts below by First Trust shows the power compounding dividends can have on a portfolio.
Selling stocks during market downturns not only locks in losses and avoids the opportunity for investments to rebound but also stops the income stream from dividends corporations pay to investors. If you’d like to discuss your investments and how dividends could help your portfolio, call Shore Wealth Management today.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
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