Investing in stocks is a long-term game. The idea is that over the long haul, economic growth and continued progress spur stock prices higher. That’s because better economic growth signals higher earnings and revenues. Therefore, this leads to higher valuations for stocks. In the short run, it’s anybody’s guess. Thinking long term, there is a sort of correlation between gross domestic product (GDP) and equity prices. The economy expands and stocks tend to rise.
This is a bit troubling considering some growth forecasts for the world.
Several analysts are now predicting slowing growth in the near and long term. We’re talking about two decades worth of slowing expansion. With global growth potentially stalling for a while, returns for stocks could be hit hard. However, for investors, dividend stocks could provide the answer to malaise.
Be sure to check out Dividend.com’s investing ideas center to learn more about dividend strategies.