In the stock market, businesses, which do not generate steady revenue and pay a dividend to shareholders, are the worst-performing stocks.
Many cryptocurrency investors have never owned a publicly-traded company, but as you can see, from 1986 up until the time the RBC study above ended, dividend growers compounded at a rate of 12% annually.
To give you an idea, every $10,000 invested in 1986 was worth $190,000 by 2012.
You see, stocks, coins, and tokens all represent your equity stake in a business.
For example, if I own even one share of McDonald’s, a portion of the business belongs to me.
As a minority owner, I get to participate in the wealth generated by the business.
One of the ways, which shareholders do this is fundamental to all enterprises – it’s called a profit distribution.
Look at the monumental difference dividends have made to patient investors, though.
When a business you own shares of, for example, Colgate-Palmolive, pays a quarterly dividend, you can use that cash injection to buy more shares of the company.
Essentially, you’re using the profit distribution to grow your position.
This is called reinvestment, and from 1960 to 2016, every $10,000 turned into $2.1M for investors who followed this system, as opposed to only $385K for those who spent their dividends on lifestyle expenses or otherwise.
The gap is magnified the more it is practiced. Time is the friend of a productive habit.
Neither Bitcoin, nor any other cryptocurrency or blockchain project currently pays a steady dividend, which is why they can plummet or rally like a roller-coaster.
It is impossible to truly pinpoint intrinsic value without earnings. It doesn’t surprise me, then, to see a scenario like Q1 of 2018.
The total market cap went down from around $612B to $261B.
Ripple’s price dropped 78%.
Bitcoin Cash (BCH) lost about 73%.
Now, with that said, it’s important to understand that dividend investing is the surest investment strategy for a 30-40 year plan. It is not, and will never be, a 5-7 year plan like cryptocurrency wealth has been thus far.