Why Income Matters in Your Investment Strategy

Jun 3, 2024 | Investment Management

Investors often get caught up in the thrill of watching their investments grow in value. It’s like riding a wave during a booming market—it feels fantastic.

But while we’re fixated on growth, we might overlook something equally important: income. Let’s take a closer look at why income should be a crucial part of your investment plan.

1. Financial Strength

Imagine investing in companies that consistently rake in revenue and profits. These are the ones that often reward investors with regular dividends. Essentially, they’re the rock-stars of financial stability. By putting your money into these steady performers, you’re aligning yourself with businesses that know how to weather storms and keep growing.

2. Protection Against Inflation

Keeping up with rising prices can be tough, especially when you’re relying solely on investments. But here’s where income comes to the rescue. When you invest in companies that regularly increase their dividends, you’re essentially building a shield against inflation. As those dividends grow over time, they help you maintain your purchasing power, even as prices rise.

3. Tax Benefits

Even if you’re all about growth, you can still reap the rewards of dividend income. Just reinvest those dividend payments, and you’ll see your investment snowballing. Plus, there’s a sweet tax advantage to be had with qualified dividends—they’re taxed at a lower rate than other types of income. It’s like getting a bonus for being a savvy investor.

4. Peace of Mind

Ever heard of “dividend aristocrats”? These are top-tier companies that have increased their dividends for at least 25 years straight. They’re like the wise elders of the investment world, weathering every financial storm imaginable. Investing in these stalwarts isn’t just about making money; it’s also about sleeping soundly knowing your investments are in safe hands.

5. Stability in Stormy Seas

Picture your investment portfolio as a ship sailing through choppy waters. Market downturns can feel like giant waves crashing against you. But if you’ve got a steady stream of dividend income, it’s like having a sturdy lifeboat. It cushions the impact of market turbulence, keeping your portfolio afloat even when others are sinking.

Investing for income might not have the same thrill as chasing explosive growth, but it’s a tried-and-tested strategy.

Over time, the combination of stock price appreciation and growing dividends has consistently outperformed other assets like bonds and savings accounts. And let’s not forget, quality dividend-paying stocks have a knack for beating inflation in the long run. So, if you want a well-rounded investment portfolio, make sure to consider income as part of the picture.

Learn how our unique approach and personalized advice can help you grow the value of your financial portfolio.

Disclaimer: Pring Turner is a Financial Advisor headquartered in Walnut Creek CA, and is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The views represented herein are Pring Turner’s own and all information is obtained from sources believed to be accurate and reliable. This information should not be considered a solicitation or offer to provide any service in any jurisdiction where it would be unlawful to do so. All indices are unmanaged and are not available for direct investment. Past performance does not guarantee future results.