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Many people are drawn to dividend-paying stocks because they provide a stable, regular income and some only invest in these types of stocks. While they offer reliable income, they don’t provide the same potential for growth as stocks focused on capital appreciation.
At just 23 years old, one investor has earned $750 in dividends and decided to share this exciting milestone on Reddit, a popular online discussion board with millions of members. While he’s proud of his earnings, he feels behind and wishes he started investing much earlier.
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“I’ve been on this thread for the last 2-3 months and been seeing a lot of people making several thousand in dividends per month and I started feeling like I was behind,” he wrote.
Despite not having a high income, this young man has tapped into the benefits of dividends and plans on expanding his stock portfolio. His goal is to earn $1,500 annually, but he’s seeking advice from Reddit’s r/dividends community because he isn’t entirely sure his strategy is right.
“This is so exciting since my income isn’t super high, but I really wish I started when I turned 18,” his post says.
With questions about whether his dividend returns are “too high” and how to boost growth, his post has sparked a heated debate on dividends versus growth on Reddit.
Let’s explore the feedback in the comments and find out what Redditors suggested the young investor do.
Most commenters emphasized focusing on growth over dividends at such a young age because it yields better long-term outcomes.
“Please don’t forget growth at your age,” the first comment says.
In a response to this comment, a Redditor agreed, saying, “Exactly. Imagine the capital growth that would have been possible just this year. At 23, capital growth should be the only goal.”
Other comments were sharper, with one implying that the 23-year-old’s priorities are off track.
“23 and you’re not focused on capital growth but income? You may want to reevaluate priorities,” one comment reads.
“Bro, you’re 23, not 63. Buy some growth stocks,” another Reddit member wrote.
A commenter more focused on strategy recommended that young investors buy growth stocks and later swap them for dividend-paying stocks.
“Why are you investing in dividends at 23? Investing in growth for a few decades and then swapping to dividends is generally a better strategy,” the Redditor wrote.
Index funds like the S&P 500 and other growth-focused ETFs are commonly suggested on Reddit because, according to the board members, they are the best options for young investors.
“I don’t think you can go wrong with an S&P 500 fund like VOO. SCHG is a great growth fund and QQQM is also a solid choice. SMH or SOXQ if you believe in semiconductors,” a comment says.
Another Redditor suggested the 23-year-old invest in VOO instead of dividend-focused stocks because 30 years from now, he’ll be “loaded.”
“You are making a huge mistake and at 23, you don’t even know it! If you only did VOO for 30 years, you’d be loaded! You have decades of compounding ahead of you,” the Redditor wrote.
Yet another comment implies that ETFs like SCHD and SCHG would allow the young investor to become financially independent.
“Use both of these ETFs. SCHD and SCHG. Your dollar cost average into these ETFs. They will be your insurance of financial freedom later in life,” the Reddit member’s comment reads.
