Dividends4Life: Why Dividend Growth Stocks

Why Dividend Growth Stocks

Posted by D4L | Tuesday, June 19, 2012 | | 0 comments »

Why are people...so obsessed with dividend "income"? The money you get paid is money that is removed from the company you still own. Which is why the value of a company drops in relation to its dividend payment. Dividends are merely transferring cash from one entity you own (a public company) to another (your bank account). To me, that is not what "income" is. Income is acquiring new cash that you didn't already have rights to.

Income is not "acquiring cash that you didn't already have the rights to." (The proper word for that would be winnings or windfall or inheritance.) Rather, income is acquiring cash that you do have the rights to or at least the reasonable expectation of receiving. Common sources of income are bonds, a job, a pension, Social Security, an annuity, and, most pertinent here, dividend stocks. A central goal in dividend growth investing is to accumulate dividend rights.

Source: Seeking Alpha

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