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Should Investors Buy Dividend Stocks Right Now?

By Rachel Warren, Jason Hall, and Toby Bordelon – Jan 10, 2022 at 2:19PM

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There are a host of benefits to incorporating dividend investing into your overall strategy.

Investing in dividend stocks can be a great way to diversify your portfolio while enhancing your returns over the long haul. In this segment of Backstage Pass, recorded on Dec. 13, 2021, Fool contributors Rachel Warren, Jason Hall, and Toby Bordelon discuss their approaches to dividend investing and answer a member's question. 

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Rachel Warren: From Richard O., "How much do dividends matter to you guys and overall market return?" I love investing in dividend stocks. I own a few. AbbVie and Johnson and Johnson are a couple that come to mind and other one that I think is on my maybe I didn't put it on my list of one I'm watching, but it is one I'm watching is Innovative Industrial Properties. Which is essentially a cannabis REIT. If that's how you say and I would say REIT. [laughs]

Jason Hall: REIT.

Warren: Dividend stocks are always a part of my overall investing strategy. Those are generally really resilient companies.

I tend to go though, to be clear for dividend stocks that have really like long track record of increasing and sustaining their dividend. I think that can be a big part of an overall portfolio returns. That's a big one for me.

Hall: Toby, what about you on dividend stocks?

Toby Bordelon: It's not something that necessarily look for specifically when of investing in a company, but it always is a nice bonus and I do like to see it. I really like to see companies I invest in when they are growth companies and then transition to paying dividends. That's always fun. I actually have one company I looked at today. Dividend payment came through. I'm looking at it like, annualize that out.

That's a four-figure dividend check every year. That's awesome. It's just grown over time. The dividend just keeps getting increased every year.

Eventually it starts to add up. You get enough of those and you've got a few thousand dollars every year that you get to work with and invest elsewhere or spend as you desire.

Warren: Pretty sweet. [laughs]

Hall: Just putting a wild guess on it because I actually haven't added up the total. In some time. I think probably about 25% of my overall portfolio is in dividend, stocks that yield dividend of 3% or higher.

It's probably a larger percentage than a lot of younger investors. But those are all companies that can grow that dividend 5% or more every year that have a long track record, but also have a good opportunity to grow the payout.

Jason Hall has no position in any of the stocks mentioned. Rachel Warren owns AbbVie and Johnson & Johnson. Toby Bordelon has no position in any of the stocks mentioned. The Motley Fool owns and recommends Innovative Industrial Properties. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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