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Tuesday, November 18, 2014

Growth Stocks Over Dividends?


I know some people will look at the title and think I'm crazy. But when stock prices are as high as they are, I don't think it's wrong to say that sometimes going for growth rather then dividends is a better move to make. If you plan to truly hold a stock, then yes you go for dividends. That way the long time you need to make your big return from strictly dividends is there. But  when holding a stock for anything less then year I find growth stocks to be better.

 If played correctly you can protect yourself along the way to making a big profit. Say you buy stock X at 49.50. By the time it goes to 52.50 on the path to your target of 55.00, you sell some shares to protect your profits. You will probably get this sooner then you would get it from dividends. Lets face it, unless you're rich or you find a true bargain, you're waiting a long time to build up off just dividends. Not only that but a bad week in the market can annihilate a year of strong dividends. To me, it's almost not close in most cases.

I think growth stocks are risky but if played correctly they're a lot better for the smaller investor to build up. If you think day trading is risking your money, good luck putting $15,000 in a stock that barely moves up but takes a big move down. Unless you've collected dividends for years chances are you wont have built up enough protection. So please note, I'm not saying dividend stocks are bad. Growth dividend stocks are the best you can buy. But I think growth stocks can be a better play at the right time then dividend stocks for a lot of the smaller investors that don't have 6 or more digits to put aside.

Just something to consider if you're looking for growth without having to put down half of your life savings. Good luck in the Markets everyone!


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