From CNBC: 2025-04-08 11:27:00

Jenny Van Leeuwen Harrington discovered the comfort of dividend investing in 2001, leading her to manage a dividend income portfolio that offered emotional comfort and superior long-term returns. Dividend income provides a reliable income stream regardless of market conditions, encouraging good investment behavior and creating stability for investors.

Investors in dividend-oriented strategies can be categorized into those who need income for retirement or lifestyle, and those who simply enjoy seeing income in their portfolios. Dividend income provides a sense of security in a volatile stock market, offering consistent cash flow each month. Harrington realized the value of dividend investing during the bear market of the Great Financial Crisis in 2009, reinforcing the importance of communication and reliability in investment management.

Dividends are regular cash payments made to shareholders by companies, providing a fixed source of income regardless of stock price fluctuations. Companies pay dividends to attract shareholders, signal confidence in their financial prospects, and ensure predictable returns for investors. In 2022, S&P 500 companies paid a record $565 billion in dividends, reflecting a renewed focus on shareholder returns in a changing economic landscape.

Investing for dividend income offers emotional comfort and stability in turbulent market conditions, encouraging sound investment behavior for long-term success. Dividend income allows investors to stay invested during market downturns without the need to sell stocks for cash, supporting a disciplined approach to wealth management. The reliability of dividend payments fosters a sense of security and encourages prudent decision-making in challenging market environments.

Companies that pay dividends aim to provide a reliable income stream for shareholders, signaling financial strength and stability. Dividend income stocks like Dividend Aristocrats focus on creating income for investors, while dividend growth companies like Procter & Gamble prioritize consistent earnings growth and dividend increases. Dividends play a crucial role in attracting long-term investors and maintaining shareholder confidence in a company’s financial prospects.

Dividend payments are viewed as a sign of corporate strength and stability, offering immediate returns to shareholders and fostering trust in a company’s future prospects. Overseas, dividend payments may be less consistent than in the US, serving as occasional bonuses rather than regular income sources. Dividends are a practical way for companies to reward shareholders and signal financial health, providing a tangible benefit to investors and strengthening the company’s reputation in the market.

Read more: The basics of income investing