Dividend stocks are versatile investments that can serve different purposes in a portfolio. Some investors rely on them for a steady stream of income, which can be paid monthly, quarterly, or annually depending on management's policy. Others use them to boost their portfolio's performance by reinvesting the dividends to compound their returns over time.

Still others use dividend stocks to achieve capital growth in difficult markets. However, it is rare to find dividend stocks that can offer both income and market-beating capital growth because of the way dividend payments affect a company's stock price (adjusted lower on the ex-dividend date), as well as its financial position (less cash and lower retained earnings).

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Source Fool.com