Dividends are often overlooked by investors who are looking for quick and high returns. However, Amanda Lang, the renowned business journalist and author, believes that dividends play a crucial role in achieving long-term financial goals. In her book, “The Power of Dividends: A Model for Successful Investing,” Lang shares her insights on the importance of dividends and how they can significantly impact an investor’s portfolio.
According to Lang, one of the main advantages of dividends is their ability to provide a steady stream of passive income. This is especially beneficial for investors who are nearing or in retirement, as the regular cash flow can supplement their other sources of income. Dividends also provide a cushion against market volatility, as even if the stock price decreases, the investor can still receive a dividend payout. This can help mitigate losses and allow for more stable returns in the long run.
Moreover, dividends have historically been a significant contributor to overall returns in the stock market. Lang points out that over the past 50 years, dividends have accounted for a large portion of the S&P 500’s total return. This shows that consistently reinvesting dividends can significantly improve an investor’s returns over time.
To truly benefit from the power of dividends, Lang recommends a long-term approach to investing. By holding onto dividend-paying stocks for many years,