Part 6/10:
Critics argue that investors can simply liquidate stock holdings to access cash, making dividends redundant. Yet, this approach carries risks. Relying on share sales exposes investors to market timing pitfalls, which could adversely affect their taxable income and lead to unplanned capital losses.
Dividends offer a steady income stream irrespective of market fluctuations, allowing investors to plan cash flows effectively. This predictability is particularly appealing for those who rely on investment income in retirement or other significant life stages.