3 Reasons to Avoid Dividend-Paying Stocks

Dividend stocks have plenty of great qualities, but they aren't the best investment for every purpose. Different assets are optimized for different roles. When investors put together a financial plan, it's important to make sure that you aren't using dividend stocks when something else is better suited for a specific purpose.

If your priority is high growth, then dividend stocks aren't always the best tool to get you there. Companies usually require predictable cash flows before they start distributing capital directly to investors. High-growth businesses generally retain their cash so they can invest in new hires, product development, and marketing. For this reason, dividend stocks tend to be mature businesses that offer stability, but they generally have limited growth prospects.

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Source Fool.com