In the world of investing, there is still something of an albatross around the idea that dividends are a smart strategy. As a dividend essentially gives you and other shareholders a small reward for owning stock in the company, it’s still grown in popularity over the years.
Key Points
This Redditor is surprised at just how many people ignore the potential of dividend income.
The belief is that growth stocks are far more likely to provide you with greater returns.
What this Redditor knows is that dividends are a great way to create passive income.
It’s hard to believe, but today there are credit cards offering up to 6% cash back, $200 statement credits, $0 annual fees, travel rewards, and more. See for yourself, I couldn’t believe it at first. Frankly, with rewards this good we don’t expect them to be available forever. But if you sign up today you can secure some of the best rewards we’ve ever seen. Click here to get started.
Well, one Redditor posting in r/dividends wants to get to the bottom of the whole notion of dividends being looked down on. Their take on the situation is that this hatred for dividends has gotten out of control, and that you can achieve both growth and dividend returns from a single stock, so what’s the issue?
Dividend Disgust
According to the original poster, they are concerned that dividend hate is very much out of control. They believe that dividend stocks are the “highest standard in long-term investing.” More importantly, they are calling out that 95% of the posts in r/dividend include someone complaining about the long-term viability of a strategy heavily focused on dividends.
It’s not unusual to see the dividend idea get pushed aside in favor of the belief that there are plenty of people who solely believe in growth stocks. There is also another group who only look at dividends as a way to create passive income after or starting right before they retire. However, if you want a dividend strategy, it’s not impossible to build one, depending on your portfolio size, that can return tens of thousands of dollars a year in returns.
The Dividend Subreddit
There is no question that the Redditor is spot on in one regard, that the divided subreddit is surprisingly anti-dividend more than it should be. It could be trolls, but there is no question that this subreddit has more detractors than it should, given the subject matter. This is likely the catalyst between the Redditor’s post and their belief on what should be done.
However, for those who want a consistent income stream, and a passive one at that, dividends make a great deal of sense. While it’s more often that dividend strategies are recommended for those who are slightly older and closer to retirement, this doesn’t mean it can’t work for those who are younger. While growth stocks may have better returns overall, this doesn’t mean that dividends don’t have some advantages.
Most people in the r/dividend subreddit rightfully point out that, beyond the income stream, dividends are a smart way to protect your downside. This means that when the stock market is volatile, as was the case in April 2025, dividends will still be issued, even if your growth stocks are down. Instead of waiting (and hoping) that your growth stocks will come back quickly, dividends ensure that you are going to get a monthly or quarterly payout no matter what.
Qualified dividends are even often taxed at lower rates than ordinary income, so there are some tax advantages here as well. This means it’s a tax-efficient way to generate revenue, making it yet another compelling reason to consider this approach.
Some Dividend Advice
Ultimately, the best piece of advice is to ensure a diversified portfolio that includes both dividend and growth stocks. If you are an investor looking to grow a retirement fund, the best piece of advice is to diversify yourself enough that you can not only withstand downturns but also take advantage of all of the market upswings.
Better yet, you should also consider reinvesting dividends if you don’t need the passive income immediately to compound your growth anymore. This is especially true if you have a ROTH IRA, where you can grow your funds as a tax-advantaged account.
The next best piece of advice is to review your portfolio regularly and make adjustments as needed. If this means you have to shift money between growth and dividend stocks, you should do so. The goal is to stay within your risk tolerance while establishing a portfolio that maximizes your returns. If you are informed about different market trends and consistently read Reddit to see how others are handling their portfolios, you should be on the right track toward retirement.
Retirement can be daunting, but it doesn’t need to be.
Imagine having an expert in your corner to help you with your financial goals. Someone to help you determine if you’re ahead, behind, or right on track. With SmartAsset, that’s not just a dream—it’s reality. This free tool connects you with pre-screened financial advisors who work in your best interests. It’s quick, it’s easy, so take the leap today and start planning smarter!
Don’t waste another minute; get started right here and help your retirement dreams become a retirement reality. (sponsor)
The post Why I Still Defend Dividends As The Key to Actual Investing Success appeared first on 24/7 Wall St..
