Why I’d invest in dividend stocks instead of growth stocks today

first_imgWhy I’d invest in dividend stocks instead of growth stocks today Enter Your Email Address Simply click below to discover how you can take advantage of this. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. See all posts by Peter Stephens Peter Stephens | Monday, 1st February, 2021 I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img Get the full details on this £5 stock now – while your report is free. Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. FREE REPORT: Why this £5 stock could be set to surge Buying dividend stocks rather than growth stocks may sound like a strange idea to many investors. After all, dividend shares have historically been viewed as the preserve of income investors, rather than individuals who are seeking to generate growth within a portfolio.However, with many growth stocks now trading on high valuations after the recent stock market rally, I think dividend shares may offer better value for money. They could also gain in popularity as a result of a lack of income investing opportunities available elsewhere. The result could be high total returns in the coming years.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Value opportunities among dividend stocksWhile the stock market rally has lifted the valuations of many shares, it is still possible to obtain relatively high levels of passive income from dividend stocks. In fact, around a fifth of the FTSE 100’s members offer yields in excess of 4% at the present time. This suggests that there may be a number of large-cap companies that offer good value for money. Although this does not guarantee share price growth in future, it can suggest that there is greater scope for capital appreciation.By contrast, many companies that have impressive earnings growth forecasts have risen sharply in value in the recent stock market recovery. Investors seem to have become increasingly focused on those businesses that are expected to produce rapid rises in their bottom lines. The result of this, in some cases, is a high valuation. This may limit the potential of growth stocks to deliver further share price gains, since investors may already be ‘pricing in’ their prospects.Increasing appeal of dividend sharesDividend stocks may become increasingly attractive over the coming years. Although predicting interest rates is notoriously challenging, it seems relatively likely that the days of 4%-5% interest rates are not set to return for a prolonged period of time. This may mean that some passive income investors switch from other income-producing assets, such as cash and bonds, to dividend shares due to their relatively high income return prospects.This high demand for dividend shares may mean that they offer greater return prospects than the wider stock market. Even if they match the wider stock market’s rise, they could offer the prospect of producing a high single-digit total return on an annualised basis, as per the past returns of indexes such as the FTSE 100 and FTSE 250 over recent decades.Clearly, there is no guarantee of any future returns from any stock. The stock market may fail to match its previous capital growth rates, while dividend stocks may also struggle to deliver high total returns. However, their low valuations and potential to become more popular could mean that they offer a greater chance of producing market-beating returns in the long run.last_img

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