Dividends vs. Real Estate Investment

Some stock pays dividends even if the share price falls.

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Investing money can give you an opportunity to see your savings grow or to secure a new source of income. Investing for income can take many forms, including dividend stocks and real estate. In both cases, the owner receives money on a regular basis while hoping for the principal value of the investment to grow, but real estate and dividend stock investing are very different, and may not both be appropriate for all investors.


Real estate investments and dividend stocks are similar in that they both pay out to the owner for the duration of the time they are held. In the case of dividend stocks, the company pays a fixed price per share each year. In a real estate investment, the owner receives payment in the form of rent from tenants, usually each month. Meanwhile, the value of either the stock or rental property can increase as well, representing an additional profit once it's sold.

Real Estate Income

One major way in which dividend stocks and real estate investments differ is in terms of how much income they provide. With a real estate investment, the rental income is subject to local supply and demand of housing or commercial space, and to the price that renters are willing and able to pay. This means that real estate in a high-rent neighborhood provides more income than similar property in a depressed region.

Dividend Income

Stock dividends depend on the dividend prices set by the company's board of directors. These prices are subject to change as the board pursues new strategies or sees the company's performance change over time. Since dividends are paid on a per-share basis, the more shares of stock an investor owns, the higher the total dividend payment.

Cost and Ownership

Another significant difference between real estate and dividend stock investments is what is involved in owning each type of asset. Dividend stock is easy to buy through a broker, and requires very little action on the part of the owner once it's purchased. Dividend checks arrive every year and the stock value changes according to the market. Real estate investments, on the other hand, are much more complex. Buyers must learn about properties they wish to buy, negotiate prices, pay property taxes, and pay for or provide management and maintenance services. Buying real estate as an investment may also require a mortgage loan, which adds another layer of complexity to the process; most dividend stock is purchased with money the buyer already has in a bank account.