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Why Buy a Dividend Stock?

Why Buy a Dividend Stock?

The main reason is that dividend stocks with yields below the average of the S&P 500 index, which stands at 1.62% at present, frequently deliver above-average returns on capital on a multiyear basis. Alternatively, stocks with yields above the S&P 500 average can serve as powerful hedges against market volatility, and provide healthy levels of income over time. Like any investment, though, you should have a clear idea about how a dividend stock fits into your broader strategy and overall portfolio before buying shares.