Actually, the "What Is A Dividend" article covers this in depth...but I really must say, dividends are truly my best, favorite and recommended form of passive income.
I'll give you a list of pros and cons.
pros of dividends
"Most passive" form of passive income - when dividend companies pay out dividends, the dividends are usually wired either to your bank account, your brokerage account or mailed to you as cheque. In Singapore, it's wired directly to my account, and it's always wonderful to find additional money in my account =D
Traditional, tested, organized - usually all you need is a bank account, a brokerage account and maybe an approved regulatory account (in Singapore it's having a CDP account with SGX) - and you can start investing in dividend stocks and waiting for dividends (which is very, very different compared to cryptocurrency investing that is so highly fragmented and speculative). The companies that have been paying dividends tends to have been around for years if not decades.
Liquid and quick - if I want to "liquidate" my stocks to get cash, it is so easy - just a call/SMS to my broker, and it's done, or I can do it myself, and the money is wired to my bank account in just a couple of days. Cryptocurrency is so much more difficult, tedious and fragmented.
Physical companies - companies that pay out dividends traditionally are physical, real world companies that serve a physical need. An example would be Coca-Cola, which sells real cola to people all over the world. Or Pepsi. Or a REIT (real estate investment trust) that deals with property rental. You can go to their HQ, meet their team, listen to AGMs, see the documents etc.
cons of dividend stock investing
You need money - to have a sizable dividend payout, you need to have a sizable investment amount. 10% of $1 is 10 cents. For you to retire on your dividends, it'd depend on how much you need a month, translate that to amount of dividend stocks value and their dividend yields.
You need time - assuming you are young, and you have to slowly earn, save and invest your savings over long time to have the compounding effect to kick in. Unless you have a large pot of gold, but still, you'll need time to research and study
The dividends are small, 3-10% - this is linked back to item 2, because the dividends of stable companies tend to be small, between 3-8% is more realistic, unless your entrypoint is spectacular.
Companies can go bust - every company has risks (even if they had been around for 10-20 years), and that's why you need to spend some time to understand the fundamentals of any company, before you invest into them.
Tip of the day: index investing
If you want an easy approach to investing without having to research the companies to invest into, then I recommend you invest into index stocks. This is also advised by Warren Buffett, because index investing is so simple, and index funds, once normalized, has only gone up through the years...ON TOP of dividend payouts and multiple depressions.
Downside to index fund investing is that the dividend yield tends to be very, very low. Singapore's STI ETF dividend yield is about 2.6%.
But it is very, very, very safe and very defensive.
It'd depend on your investing philosophy, approach, how hands-off/optimized you want your investment to be etc. If you are a very, very busy person and/or want 100% safe - then go with index investing.
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