Are dividend stocks only for older people?

Are dividend stocks only for older people?
Most dividend stocks have low betas, which I will define as anything less than 1.0. Let’s talk briefly about betas, and then talk about how they relate to dividend stocks, and what you should be considering for your investments.
Beta is used to measure a stock’s risk. It is a measure of a stock’s volatility in relation to the overall market. Something that mirrors the S&P 500 Index exactly would have a beta of 1.0. A stock that amplifies the swings of the market will high a beta above 1.0. A stock that swings less than the market does will have a beta less than 1.0.
Higher beta stocks are supposed to be riskier but provide higher potential returns. In contrast, a low beta would be associated with less risk and less return.
Dividend stocks are going to have lower betas. They are good for capital preservation and stability, but offer less potential growth in the form of capital appreciation. So theoretically, low beta stocks might be better for older people that are closer to retiring. Older people are going to have more money than young people. If you have half a million in dividend stocks maybe 3% dividends, that is $15,000 in dividend payments each year. The older you get, the more defense you want to play your investments. The name of the game becomes capital preservation rather than appreciation. While dividend stocks are particularly attractive for older people, I would argue that they are for everyone, even young people. The major online brokerages all have some type of dividend ETF, and I own some of these in my own portfolio. Don’t write off dividend stocks as just for boomers. These investments might be as sexy and environmentally friendly as Tesla, but they are consistent and steady which means something.
There are tax considerations for dividend stocks that I would be remiss if I didn’t mention. Taxes will have an impact because if you are paying taxes in dividends, that is money that is not working for you in the stock market, it’s going out of your pocket to the tax authorities. That dollar you just paid in tax could have been generating returns in the stock market for decades until it was time for you to cash out. Therefore, there is an argument that capital gains are better than dividends. However, dividends are tax free in Roth 401(K) and you will not pay taxes in a traditional 401(k) until you start making withdrawals, which should be in retirement.
Growth stocks, like technology, are going to have higher betas. They should outperform the market over a longer time frame and are better for younger people with longer time horizons. However, you can’t invest just based on betas. That would lead you to invest in companies that are risky and may have less financial health. You could quickly go broke just focusing on high betas alone.
In the end, you really can’t go wrong investing in an S&P 500 index fund or a total market index fund. Also, be sure you portfolio has a bit of international exposure so you are better diversified.
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