MODULE 2

GROWTH VS DIVIDEND
STOCKS
TABLE OF CONTENTS

1. What are growth stocks

2. What are dividend stocks

3. Reasons to invest in growth stocks

4. Reasons to invest in dividend stocks

5. Difference between growth and dividend stocks

6. Examples of growth stocks

7. Examples of dividend stocks

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WHAT ARE GROWTH STOCKS

• A growth stock is any share in a company that is anticipated to

grow at a rate significantly above the average growth for the
market. These stocks generally do not pay dividends.

• With a growth stock, the underlying company generally chooses

to reinvest any profits in the business itself. By doing this it leaves
relatively little money left over for investors, so dividends tend to
be minimal. However, this reinvestment does tend to grow the
value of the business over time. This, in turn, increases the value
of the company’s stock.

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WHAT ARE DIVIDEND STOCKS
• Dividend stocks are companies that pay out regular dividends.
Dividend stocks are usually well-established companies with a
track record of distributing earnings back to shareholders.

• Dividend stocks provide two sources of return: regular income

from dividend payments and capital appreciation of the stock
price. This total return can add up over time.

• A dividend stock is one that emphasizes regular dividend

payments instead of the asset’s share price. As an investor, you
plan to make the majority of your return off of these regular
payments.

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REASONS TO INVEST IN GROWTH STOCKS
• Growth stocks allow you to reap the full benefit of a long term
stock market gain, considering that growth stocks would typically
outperform the market.

• If you need to substantially beat inflation and generate high real

returns, growth stocks provide that opportunity to strengthen your
purchasing power.

• You can also achieve a faster compounding of wealth by investing

in growth stocks, provided the investor is also able to withstand
the volatility that may arise along the way.

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REASONS TO INVEST IN DIVIDEND STOCKS
• Dividends can be a major source of the total returns, especially
when there’s generally a poor price appreciation in the stock
market.

• Having a high-yield dividend portfolio can be a good source of

retirement earnings. Moreover, they are less volatile which
matches the risk profile of a typical investor nearing
retirement/already retired.

• As a young investor in dividend stocks, it can facilitate a long-

term approach to investing given that your dividends can be
reinvested to increase your shareholding.

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DIFFERENCE BETWEEN GROWTH AND
DIVIDEND STOCKS

• They generally outperform growth • They generally underperform than

stocks. dividend stocks.
• Dividend stocks offer consistent cash
• Growth stocks have the potential for
flow, which is potentially less risky than
higher returns for investors.
growth stock because the investor is
getting money at regular intervals. • Re-investment of excess return.

• A release of excess return. • Longer time horizon as cash flow is

• Shorter time horizon as cash inflow is only at the end of a period.
regular.

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EXAMPLES OF GROWTH STOCKS

• Amazon

• Meta

• Alphabet

• Netflix

• Tesla

• Etsy

• Shopify

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EXAMPLES OF DIVIDENDS STOCKS

• Coca-Cola

• IBM

• AT&T

• ENB

• BX

• MSB

• BCE