1. Regular Income

• Dividends provide predictable cash flow, which can supplement salary or retirement income.

• Useful for income-focused investors, such as retirees.

2. Compounding Power

• Reinvesting dividends (via DRIP: Dividend Reinvestment Plans) lets you buy more shares, increasing your total return through compounding over time.

3. Stability and Lower Volatility

• Dividend-paying companies are often established, profitable, and financially stable.

• Their stocks tend to be less volatile than non-dividend growth stocks.

4. Hedge Against Inflation

• Dividends can grow over time, especially from companies with a track record of increasing payouts (like Dividend Aristocrats).

• This helps preserve purchasing power over the years.

5. Total Return Boost

• Even if stock price growth is slow, dividends contribute significantly to total return.

• Over decades, dividends can account for a large portion of equity market gains.

6. Tax Efficiency.(Singapore )

  Dividend in Singapore is tax free.

7. Market Discipline

• Companies that pay regular dividends are often disciplined with cash and less likely to make risky investments.

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Example:

If you invest in a company like OCBC or Johnson & Johnson, you may get 3–5% dividend yield annually plus potential stock price appreciation, making for a powerful long-term strategy.