4 Reasons to Avoid Relying on Dividend-Paying Stocks
Many people are fans of dividend-paying stocks for a variety of reasons, most notably that when you own dividend payers, you'll receive a passive income stream without having to sell any shares of your underlying investment.
While there are merits to holding stocks that pay dividends, there are four major reasons you should think twice before making dividend payers the core of your investment strategy. Here, we'll explore those four reasons and offer some basic guidance on how to invest instead.
Assuming you're using a regular taxable account rather than a tax-deferred retirement account, every dividend you earn will be taxed as its received -- whether you take the dividends in cash or reinvest them. Further, you have no control over when or if you receive a dividend; the company declares it, and you receive it shortly thereafter.
Source Fool.com
