Investors buying stocks typically do so for one of two reasons: they believe the price will go up and they can sell the stock at a profit, or they intend to collect the dividends paid on the stock as investment income.
Of course, some stocks can at least partially meet both goals, but most stocks can be divided into one of three categories: growth, income, or value. Those who understand the characteristics of each type of stock can use this knowledge to increase their money in a way that suits them. What do I mean by that?
Some investors need to see results instantly and consistently to feel that they have the right strategy. You want to hit the S&P every day, every week, every month and every year. Other investors choose a strategy based on things like logic, inevitability, math, metrics, and careful analysis of individual companies.
Who is smarter? Answer: it depends. "Immediately and steadily" means growth and dynamism. In the long term, investors see the big picture. Long-term thinkers are not worried if they finish second today. You are not a sprinter. They believe that they will win the marathon with clever planning.
However, one share category (growth, income, value) is not "better" than another. The most important thing is to choose a strategy that suits you and let the strategy determine your stock selection. It always works better than picking a few stocks and hoping that it fits into a coherent, written strategy.
Your selection should be based on several special features, such as: B. Where we are in the growth cycle, where you are in your LIFE cycle and where inventory is shown in terms of price.
Are you looking for short-term growth and satisfaction? In this case, you want a portfolio with the right technology choices. Are you looking for income in the form of dividends and do you understand the value of reinvesting dividends? In this case, you want to choose dividend stocks and ETFs, but you have to choose wisely. High dividends are sometimes a sign of a desperate company that has seen better times trying to attract capital. Do you want to pay a fair price for a profitable company? If so, you are a value investor.
Can you be all three – growth, income, value? Yes of course. You can and should use your money so that it corresponds to your risk tolerance and your time horizon. Let's do a summary and review. Let us first look at the values and the INCOME shares. A value share is a share that you buy at a price that you consider fair, based on the company's profit opportunities, track record, and staying power. "Income" in the world of stocks means dividends. There is an old market phrase that says, "Dividends don't lie." This refers to the fact that no matter what is going on in the market or in the economy, if you own a stock that will continue to give you cash pays dividends and increases this dividend every year, you own a valuable company that pays you as the owner.
With a high quality dividend portfolio, you can't beat the growth and momentum investor in the short term, but if you reinvest your dividends over time, math and history will be on your side. Reinvesting rising dividends over a long period is a strategy that has achieved very good results and that outperforms S&P over 30 years (source: Ned Davis Research).
The term "value" implies that the stock was issued by a company that is actually making money, in a growing growth industry, and the price you pay to own the rights to the company's future earnings , is fair.
Warren Buffett always said that he would prefer "a great company at a fair price than a fair company at a great price". He was looking for perseverance. He liked what he called "virtual monopolies". The later you are in an exchange cycle, the more important.
You want to find industry and industry leaders where the underlying earnings of the company are not stagnating and the earnings relative to the current price AND / OR dividend yield are within your written buying guidelines. The IQ Wealth Black Diamond dividend portfolio contains strict written guidelines for stock selection. We like great companies at fair prices that pay exceptional dividends and increase them every year.
Now let's look at the growth stocks. Growth companies usually don't pay dividends. Ideally, they grow faster than the overall markets and devote most of their current sales to further expansion.
There are growth companies in every sector of the market, but they are the most widespread in technology, aerospace and software. IQ Wealth Blue Diamond's dividend growth portfolio focuses on these future technologies plus dividends.
The Black Diamond focuses on income and value. Which one is better? It's like asking which quarter horse is better on a ranch. If both do the job, the point is controversial. You can run faster on short distances, which can be practical. The other can have more stamina.
For this reason, we have many clients who have both the Black Diamond and Blue Diamond investment strategies. We believe that almost all reputable investors can meet their needs by owning one or both of our dynamic dividend portfolios. With management fees of less than one percent and no commission, our professionally managed portfolios can tick all the boxes you are looking for. Visit BlackDiamondDividend.com for more information.
Steve Jurich is Accredited Investment Fiduciary®, professional money manager and moderator of the daily radio show MASTERING MONEY at Money Radio in Phoenix, AM1510 and 105.3 FM
Note: We are not the author of this content. For the Authentic and complete version,
Check its Original Source