Dividend Stocks vs. Growth Stocks: Which Need to Be In Your Portfolio?

admin • May 24, 2023

Dividend stocks and growth stocks are often pitted against one another as an either-or option when building an investment portfolio. 

From one perspective, we hear about the importance of building a portfolio of income-producing assets, such as dividend stocks, particularly for investors nearing retirement. Dividend stocks appeal to many investors as a safe option for supplementing their portfolio with a steady and reliable income stream, which can be comforting during market turmoil and elevated economic uncertainty. 

Conversely, growth stocks are appealing and exciting because they provide a more significant return potential, though not without inherently more risk. The idea of relying on anticipated but not guaranteed growth for a return on investment is enough to make some investors run. Still, the potential for capital appreciation keeps other investors seeking promising portfolio prospects.

Dividend stocks often get the spotlight during market downturns when investors turn to safety and stability, while growth stocks steal the show during economic expansions. With that said, wouldn’t it be more beneficial for investors to embrace a both-and strategy rather than an either-or mindset while building a well-diversified portfolio?

Exploring the Characteristics and Examples of Dividend Stocks and Growth Stocks

Before making any investment decisions, you should have a solid understanding of what you’re investing in. Let’s take a moment to explore what sets dividend stocks and growth stocks apart by uncovering their unique characteristics and highlighting a few examples of each.

Dividend Stocks

Dividend stocks regularly distribute a portion of a publicly traded company’s earnings to investors in the form of cash or stock. For example, if a company pays a dividend of 10 cents per share, an investor with 1,000 shares would receive $100 in cash. On the other hand, a stock dividend is a payment to investors in the form of additional shares. In this case, if a company pays a 10% stock dividend, an investor with 1,000 shares would receive an additional 100. 

Since the tech boom of the 90s, dividend stocks generally don’t appreciate in value as quickly or steadily as growth stocks, but growth may still happen. Therefore, adding dividend stocks to your portfolio may provide both income and capital appreciation over time.

Dividend-paying companies tend to be well-known and well-established, adding another layer of comfort for investors. Moreover, investors may feel confident investing in a financially healthy company since dividends are sourced from retained earnings. Some prominent dividend payers include Johnson & Johnson, Exxon Mobil, Procter & Gamble, and The Coca-Cola Company.

It’s not surprising that dividend stocks have become a staple in many portfolios; however, focusing exclusively on dividend stocks could result in missing out on the potential wealth-building capabilities of growth stocks. 

Growth Stocks

Growth stocks are stocks of publicly traded companies that anticipate their earnings to continue growing at a rate that tops the market average. These are typically newer companies or companies in growth sectors, such as technology or pharmaceutical, with substantial and rapid growth potential. These companies usually reinvest earnings back into the company to generate more profits, which can drive up share prices, instead of paying dividends to investors.

Growth stocks tend to carry more fluctuation risk, which may be intolerable for some investors. Investors risk missing out on potential profit if they sell their stock too early or too late since profits (or losses) are only realized once the investment is sold. Still, many investors who ride out periods of volatility have experienced considerable capital appreciation in their portfolios. 

Amazon, Google, and Tesla are classic examples of growth companies that have heavily invested in product research and development to stay on top of the innovation race. Early investors in these companies have seen a sizable increase in the value of their investments, but not without fluctuation along the way.

Investing in growth stocks can be an exciting and massive wealth-building opportunity for those willing to stomach the risk. Though as attractive and compelling as growth stocks can be, it’s essential to avoid getting too absorbed by flashy growth characteristics when building your portfolio. 

Dividend vs. Growth Stocks: Which Is the Better Buy?

In our opinion, both dividend and growth stocks are essential in any portfolio. There are cycles and conditions where one may outperform the other, but both are important to improving your portfolio’s income and growth potential.

So instead of asking, “Which is the better buy?,” a more relevant question to consider is, “What is my ideal exposure to each?”

Many factors influence your allocation, and there is no one-size-fits-all approach. Let’s take a look at a couple of examples: 

  • Age: Younger investors have more time to recover from market setbacks or bad investments. Therefore, many are willing to forgo a heavily income-focused portfolio to invest in growth stocks. However, investors nearing or in retirement may prioritize capital preservation and income generation while reducing their exposure to growth stocks. 

 

  • Risk Tolerance and Capacity: While age is undoubtedly an essential factor to consider, it doesn’t automatically mean you should have more or less exposure to dividend or growth stocks. Some younger investors can’t stomach a steep decline in their portfolios and choose to invest more conservatively. In contrast, some more seasoned investors have weathered the ups and downs of the market and are comfortable taking on more risk.

 

Risk capacity is equally important to consider. For instance, a significant loss of capital may not affect the lifestyle of a higher net-worth investor, which gives them the ability to take on more risk regardless of age. 

Since every investor’s journey is unique, adopting a holistic approach is crucial to determine an appropriate allocation. Your exposure to various investments will undoubtedly shift as you enter new stages of life with unique goals for that season, but the message remains the same: both dividend stocks and growth stocks have a place in your portfolio.

Laying the Dividend Stocks vs. Growth Stocks Debate to Rest

It’s worth noting that dividend and growth stocks aren’t the only components of a well-diversified portfolio, but both are key players. They may each have their time to shine during various cycles of the economy and market, which is why it’s important to diversify across both rather than favor one over the other. 

After all, a principle of building and preserving wealth is not to concentrate solely on what seems safe or exciting but instead to diversify and get exposure to many parts of the market in such a way that is in alignment with your risk profile and goals. 

If you’re interested in discussing your financial goals and reviewing your investment strategy to determine if you’re on the right track, we’d love to get in touch. Give us a call at 877.333.1015, email us at info@fivepinewealth.com , or visit our website to learn more about how we can help.

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What's the Best Asset Allocation for Someone 10 Years Away from Retirement?

December 22, 2025
Key Takeaways Your guaranteed income sources (pensions, Social Security) matter more than your age when deciding allocation. Retiring at 65 doesn't mean your timeline ends. You likely have 20-30 years of investing ahead. Think in time buckets: near-term stability, mid-term balance, long-term growth. You're 55 years old with over a million dollars saved for retirement. Your 401(k) statements arrive each month, and you find yourself questioning whether your current allocation still makes sense. Should you be moving everything to bonds? Keeping it all in stocks? Something in between? There's no single "correct" asset allocation for everyone in this position. What works for you depends on factors unique to your situation: your retirement income sources, spending needs, and risk tolerance. Let's look at what matters most as you approach this major life transition. Why Asset Allocation Changes as Retirement Approaches When you’re 30 or 40, your investment timeline stretches decades into the future. When you’re 55 and looking to retire at 65, that equation changes because you’re no longer just building wealth: you’re preparing to start spending it. You need enough growth to keep pace with inflation and fund decades of retirement, but you also need stability to avoid the need to sell investments during market downturns. At this point, asset allocation 10 years before retirement is more nuanced than a simple “more conservative” approach. Understanding Your Actual Time Horizon Hitting retirement age doesn't make your investment timeline shrink to zero. If you retire at 65 and live to 90, that's a 25-year investment horizon. Think about your money in buckets based on when you'll need it: Time Horizon Investment Approach Example Needs Short-Term (Years 1-5 of Retirement) Stable & accessible funds Monthly living expenses, healthcare costs, and early travel plans Medium-Term (Years 6-15) Moderate risk; balanced growth Home repairs, care and income replacement, and helping grandchildren with college Long-Term (Years 16+) Growth-oriented with a Long-term care expenses, decades-long timeline legacy planning, and extended longevity needs This bucket approach helps you think beyond simple stock-versus-bond percentages. Asset Allocation 10 Years Before Retirement: Starting Points While there's no one-size-fits-all answer, here are some reasonable starting frameworks: Conservative Approach (60% stocks / 40% bonds) : Makes sense if you have minimal guaranteed income or plan to begin drawing heavily from your portfolio upon retirement. Moderate Approach (70% stocks / 30% bonds) : Works well for those with some guaranteed income sources, moderate risk tolerance, and a flexible withdrawal strategy. Growth-Oriented Approach (80% stocks / 20% bonds) : Can be appropriate if you have substantial guaranteed income covering basic expenses and the flexibility to reduce spending temporarily as needed. Remember, these are starting points for discussion, not recommendations. 3 Steps to Evaluate Your Current Allocation Ready to see if your current allocation still makes sense? Here's how to start: Step 1: Calculate your current stock/bond split. Pull your recent statements and add up everything in stocks (including mutual funds and ETFs) versus bonds. Divide each by your total portfolio to get percentages. Step 2: List your guaranteed retirement income. Write down income sources that aren't portfolio-dependent: Social Security (estimate at ssa.gov), pensions, annuities, rental income, or planned part-time work. Total the monthly amount. Step 3: Calculate your coverage gap. Estimate monthly retirement expenses, then subtract your guaranteed income. If guaranteed income covers 70-80%+ of expenses, you can be more growth-oriented. Under 50% coverage means you'll need a more balanced approach. When to Adjust Your Allocation Here are specific triggers that signal it's time to review and potentially adjust: Your allocation has drifted more than 5% from target. If you started at 70/30 stocks to bonds and market movements have pushed you to 77/23, it's time to rebalance back to your target. Your retirement timeline changes significantly. Planning to retire at 60 instead of 65? That's a trigger. Every two years of timeline shift warrants a fresh look at your allocation. Major health changes occur. A serious diagnosis that changes your life expectancy or healthcare costs should prompt an allocation review. You gain or lose a guaranteed income source. Inheriting a pension through remarriage, losing expected Social Security benefits through divorce, or discovering your pension is underfunded. Market volatility affects your sleep. If you're checking your portfolio daily and feeling genuine anxiety about normal market movements, your allocation might be too aggressive for your comfort, and that's a valid reason to adjust. Beyond Stocks and Bonds Modern retirement planning involves more than just deciding your stock-to-bond ratio. Consider international diversification (20-30% of your stock allocation), real estate exposure through REITs, cash reserves covering 1-2 years of spending, and income-producing investments such as dividend-paying stocks. The Biggest Mistake: Becoming Too Conservative Too Soon Moving everything to bonds at 55 might feel safer, but it creates two significant problems. First, you're almost guaranteeing that inflation will outpace your returns over a 30-year retirement. Second, you're missing a decade of potential growth during your peak earning and saving years. The difference between 60% and 80% stock allocation over 10 years can mean hundreds of thousands of dollars in portfolio value. Being too conservative can be just as risky as being too aggressive, just in different ways. Questions to Ask Yourself As you think about your asset allocation for the next 10 years: What percentage of my retirement spending will be covered by Social Security, pensions, or other guaranteed income? How flexible is my retirement budget? Could I reduce spending by 10-20% during a market downturn? What's my emotional reaction to seeing my portfolio drop 20% or more? Do I plan to leave money to heirs, or is my goal to spend most of it during retirement? Your honest answers to these questions matter more than your age or any generic allocation rule. Work With Professionals Who Understand Your Complete Picture At Five Pine Wealth Management, we help clients work through these decisions by looking at their complete financial picture. We stress-test different allocation strategies against various market scenarios, coordinate withdrawal strategies with tax planning, and help clients understand the trade-offs between different approaches. If you're within 10 years of retirement and wondering whether your current allocation still makes sense, let's talk. Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation. Frequently Asked Questions (FAQs) Q: What is the rule of thumb for asset allocation by age? A: Traditional rules like "subtract your age from 100" are oversimplified. Your allocation should be based on your guaranteed income sources, spending flexibility, and risk tolerance; not just your age. Q: Should I move my 401(k) to bonds before retirement? A: Not entirely. You still need growth to outpace inflation. Gradually shift toward a balanced allocation (60-80% stocks, depending on your situation) and keep 1-2 years of expenses in stable investments. Q: What's the difference between stocks and bonds in a retirement portfolio?  A: Stocks provide growth potential to keep pace with inflation but come with volatility. Bonds offer stability and income but typically don't grow as much.

Rebuilding Wealth After Divorce: A Complete Guide to Your Financial Fresh Start

November 21, 2025
Key Takeaways Divorced spouses married 10+ years can claim Social Security benefits based on their ex’s record without reducing anyone else's benefits. Splitting retirement accounts requires specific legal documents (QDROs for 401(k)s) drafted precisely to your plan's requirements. Investment properties and taxable accounts carry hidden tax liabilities that significantly reduce their actual value. No one gets married planning for divorce. Yet here you are, facing a fresh financial start you never wanted. Maybe you’re 43 with two kids and suddenly managing on your own. Or you’re 56, staring down retirement in a decade, wondering how you’ll catch up after splitting assets down the middle. We get it. Divorce is brutal, emotionally and financially. And the financial piece often feels overwhelming when you're still processing everything else. According to research , women's household income drops by an average of 41% after divorce, while men's falls by about 23%. Those aren't just statistics. They're the reality many of our clients face when they first come to us. But here's something we've seen time and again: While you can't control what happened, you absolutely can control what happens next. Financial planning after divorce isn't just damage control. With the right approach, it can be the beginning of a more intentional and empowered relationship with your money. Here’s how to get there: First, Understand What You’re Working With Before you can move forward, you need a clear picture of your current financial situation. Start by gathering every financial document related to your divorce settlement: property division agreements, retirement account splits, alimony or child support arrangements, and any debt you’re responsible for. Then create a simple inventory: What you have: Bank account balances Investment and retirement accounts Home equity Expected alimony or child support income What you owe: Mortgage or rent obligations Credit card debt Car loans Student loans This baseline gives you something concrete to work with. You can't build a plan without knowing where you're starting from. Social Security Benefits for Divorced Spouses This one surprises people. If you were married for at least 10 years, you may be entitled to benefits based on your ex-spouse's work record, even if they've remarried. You can claim benefits based on your ex’s record if: Your marriage lasted 10+ years You’re currently unmarried You’re 62+ years old Your ex-spouse is eligible for Social Security benefits The benefit you can receive is up to 50% of your ex-spouse’s full retirement benefit if you wait until full retirement age to claim. Importantly, claiming benefits on your ex’s record doesn’t reduce their benefits or their current spouse’s benefits. If you’re eligible for both your own benefits and your ex’s, Social Security will automatically pay whichever amount is higher. What About Splitting Retirement Accounts in Divorce? Retirement accounts often represent one of the largest assets in a divorce settlement. Understanding how to handle the division properly can save you thousands in taxes and penalties. The QDRO Process For 401(k)s and most employer-sponsored retirement plans, you’ll need a Qualified Domestic Relations Order (QDRO). This legal document outlines the plan administrator's instructions for splitting the account without triggering early withdrawal penalties. QDROs must be drafted precisely according to both your divorce decree and the specific plan’s rules and requirements. We’ve seen clients lose thousands of dollars because their QDRO wasn’t accepted and had to be redrafted. Work with an attorney who specializes in QDROs. The upfront cost will be worth it to avoid expensive problems later. What About IRAs? Traditional and Roth IRAs can be split through your divorce decree without a QDRO. The transfer must be made directly from one IRA to another (not withdrawn or deposited) to avoid taxes and penalties. Tax Implications to Consider When you receive retirement assets in a divorce, you’re getting the account value and its future tax liability. A $200k traditional 401(k) isn’t worth the same as $200k in a Roth IRA or home equity, because of the different tax treatments. Many settlements divide assets dollar-for-dollar without considering how those dollars are taxed, so make sure yours addresses these differences. Dividing Investment Properties and Taxable Accounts Retirement accounts aren’t the only assets that require careful handling. If you own real estate investments or taxable brokerage accounts, the way you divide them matters. The Capital Gains Dilemma Let’s say you own a rental property purchased for $200k and is now worth $400k. Selling it as part of the divorce triggers capital gains tax on that gain, potentially $30,000-$60,000, depending on your tax bracket. Some couples avoid this by having one spouse keep the property and buy out the other’s share. This defers the tax hit, but you’ll want to ensure the buyout price accounts for future tax liability. Taxable Investment Accounts Brokerage accounts can be divided without triggering taxes if you transfer shares directly rather than selling and splitting proceeds. However, not all shares are equal from a tax perspective. Smart divorce settlements account for the cost basis of investments. These decisions require coordination between your divorce attorney, a CPA who understands divorce taxation, and a financial advisor who can model different scenarios. We remember a client whose settlement gave her a rental property “worth” $350,000. But the $80,000 in deferred capital gains owed when selling wasn’t accounted for. She effectively received $270,000 in value, not $350,000, a massive difference in her actual financial position. Building Your New Budget and Savings Strategy Living on one income after years of two requires adjustment. Start with your new essential expenses: housing, utilities, groceries, transportation, insurance, and any child-related costs. Then look at what’s left: this is where you begin rebuilding your financial cushion. Rebuilding Your Emergency Fund If you had to split or use your emergency savings during the divorce, rebuilding should be your first priority. Aim for at least three months of expenses, then work toward six months. Even $100 a month adds up to $1,200 each year. Maximize Retirement Contributions This feels counterintuitive when money is tight, but if your employer offers a 401(k) match, contribute at least enough to get a full match. Otherwise, you’re leaving free money on the table. If you’re over 50, take advantage of catch-up contributions. For 2025, you can contribute up to $23,500 to a 401(k), plus an additional $7,500 in catch-up contributions. If you're between 60-63, that catch-up increases to $11,250. Address Debt Strategically Post-divorce debt looks different for everyone. If you accumulated credit card debt while covering legal fees or temporary living expenses during divorce proceedings, prioritize paying these off once your settlement funds are available. Updating Your Estate Documents Updating beneficiaries and estate documents, a critical step, is sometimes overlooked. Check beneficiaries on: Life insurance policies Retirement accounts Bank accounts with payable-on-death designations Investment accounts Beneficiary designations override what’s in your will. We’ve seen ex-spouses receive retirement assets years after a divorce simply because the account owner failed to update beneficiaries. Address your will, healthcare power of attorney, and financial power of attorney, too. You're Not Starting from Zero Rebuilding wealth after divorce is about creating a financial foundation that supports the life you want to build moving forward. You have experience, earning potential, and time. It’s not a matter of if you can rebuild, but how efficiently you’ll do it. If you’re navigating financial planning after divorce, we can help. At Five Pine Wealth Management, we work with clients through major life transitions, creating practical strategies tailored to your specific situation. Call us at 877.333.1015 or email info@fivepinewealth.com to schedule a conversation. Frequently Asked Questions (FAQs) Q: Will I lose my ex-spouse's Social Security benefits if I remarry? A: Yes. Once you remarry, you can no longer collect your ex-spouse’s benefits. However, if your new marriage ends, you may claim benefits based on whichever ex-spouse's record is higher. Q: How long after divorce should I wait before making major financial decisions? A: Most advisors recommend waiting 6-12 months before making irreversible decisions like selling your home or making large investments. Focus first on understanding your new financial situation and letting the emotional dust settle. Q: Should I keep the house or take more retirement assets in the settlement?  A: This depends on your specific situation, but remember: houses have ongoing costs like property taxes, insurance, maintenance, and utilities that retirement accounts don't. We help clients run scenarios comparing both options, factoring in everything from cash flow needs to long-term growth potential, before deciding what makes sense for their situation.