made in heaven

One very profitable strategy in the stock market is called dividend investing. In fact there are 4 reasons why this strategy can work so well.

1. Make Money Now

The major benefit of this strategy is that when you buy some great dividend paying stocks you are able to get a monthly income without having to wait 30 years to see a profit. That is a great advantage over other long term methods, after all it is pretty hard to keep putting money away into investments which you will not see any profit from for 30 years, it can be much easier to invest in something you think will start paying you money today.

2. Your Stock Doesn’t Have To Go Up

When you are investing in Dividend stocks they do not have to appreciate in order to make a huge gain in the market. As long as it is paying out a consistent cash flow you are able to generate a monthly income even in a sideways market without having to learn stock trading.

3. Strong Stocks Can Go Up

While you do not necessarily need to find great undervalued stocks with this strategy, it can be a great bonus. When you are just investing for an income the company does not really have to grow, however finding great quality companies can be well worth your while.

So by income investing you not only make money through dividends but you also make money by appreciation.

4. You can Make Extra Money by Selling Covered Calls

Ok let me add the last sentence, by income investing you can not only make money through dividends and appreciation you can make even more money through covered call writing.

This allows you to sell someone else the right to buy the stock from you at a certain price. If the stock does not make a big move up you are able to keep it and sell another call option against it next month. But if it does shoot up you do run the risk of getting called out and having to sell it. In many cases it can still be worth it.

These are just a few of the main advantages of dividend investing. The strategy can be extremely profitable strategy, but then again it might not be right for all people.

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