Investors have some great reasons to love dividend stocks. They provide truly passive income as you simply need to hold them in your portfolio and then watch as the dividend checks come rolling in.

Opt to have these payouts automatically reinvested, and you can amplify your returns by collecting more shares that then deliver ever-increasing income. Repeat this process over decades, and you give yourself a great chance at building an impressive income stream.

Yet picking individual dividend stocks can be hard, and owning shares of just a few businesses can expose you to greater risk if one or more of them suffer big declines. That's why many income-seeking investors prefer an exchange-traded fund (ETF) that targets dividend stocks. You can achieve passive income and wide diversification with just one purchase.

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Source Fool.com