What are the risks of dividend investing?

[MarketMavin]

Good examples of risks of dividend investing are the risk involved when the companies reduce their dividend payments and that usually happens when their earnings drop. Interest rate can also affect stock dividends. Aside from that, it was also known that firms with high dividend yields may be experiencing a decline in growth or may be experiencing financial difficulties. That is why it is crucial to find out about the financial health of the company before investing.

[TheSmartInvestor]

Good examples of risks of dividend investing are the risk involved when the companies reduce their dividend payments and that usually happens when their earnings drop. Interest rate can also affect stock dividends. Aside from that, it was also known that firms with high dividend yields may be experiencing a decline in growth or may be experiencing financial difficulties. That is why it is crucial to find out about the financial health of the company before investing.

That is right! The other risk that I know is inflation. As inflation increases at a higher rate than the increase in dividends, your purchasing power decreases though you will still receive dividends.

[Peaktrader]

Good examples of risks of dividend investing are the risk involved when the companies reduce their dividend payments and that usually happens when their earnings drop. Interest rate can also affect stock dividends. Aside from that, it was also known that firms with high dividend yields may be experiencing a decline in growth or may be experiencing financial difficulties. That is why it is crucial to find out about the financial health of the company before investing.

Precisely and then there is volatility of the markets. The best dividend stocks can also declines in case of a downturn. So, investors should be ready to face price volatility.

[Olumide]

The company may not pay dividend if results are poor. Again, some companies want to maintain their dividend record at all costs by even borrowing to pay dividends. Too much debts can reduce the value of a company and cause a fall in share price. The investor gets less return from capital appreciation if share prices are depressed.

[Olusmart]

High dividend payout ratio may mean that the business does not set aside a lot of money for expansion or reinvestment. High growth businesses usually reinvest all their profits in the business rather than pay dividends. Shareholders rely on price appreciation entirely for their returns. A lot tech stocks don't pay dividends.