There are two main schools of investing – growth investing and dividend investing (income investing). Growth investors target stocks exhibiting fast growth that can help propel their share price higher over time. While this strategy can generate eye-watering capital gains, such stocks usually do not pay out a dividend as they are reinvesting their profits for further growth. Hence, an investor approaching retirement may be forced to sell off a portion of his/her growth stocks for cash flow. Income investing, on the other hand, emphasizes the flow of dividends and focuses on stocks that can pay out regular and increasing dividends. Let’s find out how a dividend investment strategy can be a more effective method to prepare you for your retirement.

Invest in solid, dividend-paying stocks

To start in dividend investing, you first need to identify reliable dividend-paying stocks to purchase. A good place to begin will be the blue-chip stocks. This category of stocks exhibits...