Dividends are for growth, not just for income. Michael Clark looks at why long-term investors should never underestimate the power of dividends in generating returns
Growth investors, including those making plans for their retirement, can misunderstand, or at least underestimate, the importance of dividends in their investments. Dismissed as merely the icing on the cake, dividends are often overlooked in the pursuit of capital growth. But there are reasons why growth investors should pay close attention to dividends and are at risk of sacrificing total return by ignoring them. Here are a few of those reasons. First, is the powerful effect of long-term compounding of reinvested dividends. Reinvesting the dividends from investments can make all the ...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes