The difference between a good and bad stock

Dividend Edition

November 02, 2022

Bear markets are a great time to be invested into dividend stocks.

Why?

Because you can still get paid even while stocks are taking a hit.

Now don’t get me wrong…

I love growth stocks, tech stocks, small caps, you name it.

But that doesn’t mean dividend paying stocks shouldn’t have a place in your portfolio.

Anyways, there’s 1 major reason why dividend stocks could be a good investment during a bear market.

You guessed it…dividends.

Companies that don’t pay a dividend often use the funds to reinvest profits back into their business.

This allows them to grow the company which should lead to higher profits in the future.

The only problem?

You can only profit through appreciation.

Meaning you only make money when you sell the stock for a profit.

And if you have to sell in a bear market, well…chances are profits are slim.

*dividend stocks enter stage right*

Dividend stocks will pay you your dividends no matter what the market is doing.

Actually, let me rephrase that.

Quality dividend stocks will pay you no matter what the market is doing.

How to know which dividend stocks are reliable?

Focus on how long they’ve paid their dividend…

Not how high their dividend is.

This will help you avoid dividend traps… (companies with high dividends to attract investors) and let you focus on increasing your cash flow.

That's all for today’s email!

Until next time,

- Wolf

P.S: Want to increase your cash flow every month? Learn how to choose quality dividend stocks, trade options, rent your car on Turo, or host an Airbnb at Cash Flow University.