Lower Capital Appreciation
Companies that pay high dividends tend to reinvest less of their profits into the business.
This can result in slower growth compared to companies that retain homeontheweb.org earnings to fund 관련주 expansion projects, research and development, or acquisitions.
Consequently, the potential for capital appreciation may be limited.
- Example: A company like AT&T, known for its high dividend yield, might not see the same level of stock price appreciation as a high-growth tech company like Amazon, which reinvests most of its earnings into growth initiatives.
Opportunity Cost
Investing in dividend stocks means potentially missing out on higher returns from growth stocks.
While dividend stocks provide regular income, the total return might be lower over the long term compared to high-growth stocks, especially during bullish market conditions.
- Example: Investors who focus on dividend-paying utilities might miss out on the substantial gains seen in sectors like technology or biotechnology during periods of rapid innovation and market expansion.
Tax Implications
Dividend income is subject to taxation, which can reduce the net return on investment.