It goes without saying that young investors like myself can afford to invest more aggressively than individuals closer to retirement. Our friends in their 50s and 60s might be more comfortable investing in extremely defensive positions in well-established companies that are going to turn a profit no matter what the macroeconomic conditions might be, while collecting a stable dividend four times a year. There is certainly nothing wrong with that investment strategy for investors of any age.
While there is no magic number to determine which stocks best fit in any individual's portfolio, there are many different factors to help investors make educated decisions. Younger investors should look beyond dividend yield when choosing stocks for their retirement portfolios. Dividend growth and payout ratio, as well as where the stock stands with regards to valuation should be taken into account, as well. Capital appreciation from undervalued stocks, along with share appreciation from reinvesting dividends will mean that today's young investors will have plenty of money to buy income stocks when they're ready to retire.
Source: Seeking Alpha
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- Warren Buffett's Two Investing Rules For Dividend Investors
- 10 Stocks That Have Paid Uninterrupted Dividends Since 1899
- Mid-Year 2012 Top And Bottom Performing Dividend Stocks
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