Dividends vs Bonds Explained | Which Is Best for You?

Dividends vs Bonds Explained For Beginners: Both financial tools provide optimal ways to earn a passive income. For many, the combination of both will suit you well, but based on the underlying differences, it's crucial to understand which may be best for you when utilizing each. - Enjoy!

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Key Takeaway: Dividends provide the opportunity for income and growth along your investment, where fixed income securities provide a fixed income over a specific period of time.

Note: When discussing bonds I am referring to all types of fixed income securities such as Treasury Bills, Notes, Bonds, CDs, Treasury Inflation-Protected Securities (TIPs), I Bonds, etc.

⏰ Timestamps ⏰
00:00 Intro
00:14 Dividends Explained
02:35 Bonds Explained
04:53 Pros & Cons
06:52 Which Is Best For You?

What are dividends?
Dividends are a payment that companies give to shareholders as an incentive for owning their stock. In the video I explained Home Depot has a 2.20% dividend yield so if you had $10,000 invested at that rate throughout an entire year, you would have earned $220 from dividend income alone. Many also pay quarterly (every 3 months), so that means every 3 months you would earn $55 from dividends.

Can you reinvest dividends?
Yes, you can. Which I actually recommend for those long term investors that are looking to grow your investments for your future. Financially, you could build wealth much quicker and allow the power of compound interest to truly have a greater impact for you.

What are fixed income securities?
Throughout the video, for bonds I am strictly referring to fixed income securities which means you are getting a guaranteed fixed income based on a specific period of time. Examples include treasury bills, notes, bonds CDs, treasury inflation protected securities (TIPs), and I Bonds to name a few.

The biggest difference I view these two is that dividends are great for long term investors riding through market volatility having the opportunity for income and growth. This allows more reward long term. Where bonds (fixed income securities here), is great for those needing a very safe place to store cash short term to get the guaranteed income over a particular time. Many can greatly benefit from a combination of both of these, but understanding the difference and how to utilize each best for yourself is very important!

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Disclaimer: This video contains links through which Danny Sully may be compensated when you click on or are approved for offers. The information in this video was not provided by any of the companies mentioned, and has not been reviewed, approved, or otherwise endorsed by any of these entities. The information provided in this video is accurate as of its posting date, though some of the offers mentioned may no longer be active.

This content is for entertainment only and does not constitute legal, tax, or financial advice. It is for general informational purposes. The presenter is not a licensed professional. Viewers should consult their attorney, accountant, or financial advisor for advice on specific legal, tax, or financial issues.

Видео Dividends vs Bonds Explained | Which Is Best for You? канала Danny Sully