Dividend Stocks Vs Real Estate – Weighing The Options

When looking at long term investment opportunities, investors have a variety of options to choose from. For those seeking to mitigate their exposure to risk while maximizing yield, two asset classes are often the go-to choice: real estate and dividend stocks. While both options are suitable investment strategies, each has its own unique set of benefits and drawbacks. Depending on which investors you ask, you’re likely to get a myriad of responses about which option is the best strategy.

However, as is often the case with investing, you’ll find that there’s no one size fits all answer. Instead, investors need to consider their own personal situation, goals, and risk tolerance — among other factors that we’ll get into — when deciding on the choice that suits them best. Let’s take a look at both options and break down the benefits of each.

Dividend Stock Investing

Investors have been using the stock market to grow considerable wealth for as long as the markets have been around. As one of the oldest and tried strategies out there, you aren’t likely to go wrong investing in quality dividend paying stocks.

The biggest advantage and difference when it comes to stocks vs real estate is that the former pays you for owning it, rather than requiring you to continuously pay to own it as with real estate.

Additionally, investing in dividend stocks has the advantage of requiring significantly less capital up front. Unlike real estate, investors are able to purchase stocks for a fraction of the cost of a residential or commercial property (or the equivalent cost of a down payment for a mortgage). After purchasing a stock, ETF, or investing in a mutual fund, the investor hasn’t acquired any debt in doing so. There’s no need for continued payments other than the reinvestment of dividends paid out to you as a byproduct of ownership. Assuming you continue to reinvest your dividends, investors get to take advantage of compounding interest and growth over the years.

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