I’m trying to understand the benefits of dividend stocks. I usually hear they generate “passive income” but from what I can tell, the dividend you receive is a tiny fraction of what you paid for the stock itself, and would take decades to recoup what you paid for the stock. Setting aside the possibility of stock price appreciation, how is receiving a small dividend better than keeping the lump sum you would have paid for the stock to begin with. What am I missing?
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You get dividends, but you also have the stock. It’s not like you lose the ability to sell the stock by taking dividends; the dividends are icing on the cake.
The ideal is that you’re collecting dividends from the stock while the stock is also gaining value, so you’re making money in two ways.
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