Advice | Experts say dividend-paying stocks are not for everyone

Lai started investing in his early 20s when ETFs weren’t widely available or popular. He started investing in mutual funds before moving on to individual stocks, such as Intact Financial and Manulife, which were paying dividends and continued to do so after the financial crisis hit.

Dividend payers are typically established companies that have excess cash flow so they start returning that cash flow to their shareholders, explained Robb Engen, a fee-only financial planner at Boomer and Echo in Lethbridge, Alta. “Dividend shareholders could do anything with that cash. They could spend it. They could invest it in a different company. So the value of the company just went down,” he said.

With a dividend paying stock like Enbridge, for example, the company is not quite so growth-oriented. Where a focus on dividend paying stocks might be beneficial is if you feel comfort from receiving a quarterly dividend, and that makes you hold onto the investment.

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