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 don’t lose what you paid for the stock automatically – you own the stock and can still sell at any time. Hopefully for more than what you bought it for. You *also* get dividends along the way while holding it. You can take that small amount of $ or reinvest it to then have more shares (bigger dividends/ larger sum when sold eventually)
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