Growth Stocks With the emergence of many new tech companies, …show more content…
Dividend stocks are typically associated with companies that have attained a certain size of operation and no longer seek capital investments for further growth. These companies tend to have high cash flows with which they choose to return to shareholders in the form of dividends. Buying into dividend companies is often similar to buying an income stream. As long as the company performs up to par, your dividends will be delivered periodically. If you are a baby boomer with a short investment horizon, fixed income assets such as dividend stocks will often meet your investment goals. Compared to growth stocks, dividend shares are lauded for less volatility, steady income streams and ability to reinvest dividends. Today, blue chip companies such as Johnson & Johnson, Proctor & Gamble, American Express, and Verizon Wireless , to name a few, are highly regarding dividend …show more content…
Fundamentally, if you are seeking income for retirement, dividend stocks will better suit your needs. For those trying to build wealth and hold a higher risk tolerance, you may be more inclined to growth stocks. With that being said, it is most advisable to combine strategies and incorporate both assets. Ideally you weight each type of stock differently depending on your risk tolerance and investment horizon. During bull markets you should increase your exposure to growth stocks as they tend to outperform the average asset in the market. Conversely, exposure should shift towards blue chip dividend stocks during market downturns, since they are not subject to as much volatility as the overall