10 Things Every Dividend Investor Should Know

8. Dividend Stocks Can Generate Higher Returns Than Bonds:

Dividend stocks, offering the potential for both capital appreciation and dividend income, have the ability to generate higher returns than bonds. On the other hand, bonds offer limited opportunities for price appreciation. In addition to this, bond yields can also be temporary. Short-term Treasury bonds with a one-year maturity offer the highest yields, exceeding 5%, while long-term bonds offer lower yields due to an inverted yield curve. In comparison, dividend stocks can sustain their yields for many years.

According to a report by Barron’s, investors seeking income are particularly drawn toward yields. So, when the interest rates were nearly zero at the beginning of 2022, dividend stocks held up better than bonds, as bonds typically move in the opposite direction of interest rates.