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Today's question comes from Nikki in Idaho.

What is the dividend stock?

My co-worker has two houses that are completely paid off by using

dividend stocks to increase her income by several thousand dollars per month and then reinvesting that

income. Bull. This sounds too good to be true. Is it possible to do this? That's a lie.

Is she trying to sell you a course on this? Yeah. I mean, you've got to, let's put it this way.

A dividend stock versus a growth stock is just a company using their profit sharing to pay you a little bit instead of reinvesting that.

So if I own stock at Home Depot and Home Depot makes a profit, they have two options.

One is reinvest it back into the company and grow Home Depot and then the value of my stock might grow.

Or they can pay the profits out in the form of dividends.

A dividend stock is a company that is mature.

It's not in a growth phase.

It's in a mature phase.

And they pay out all their profits. So it's an old, big dinosaur

company, like an alkalo aluminum. Johnson and Johnson. Johnson and Johnson, Procter and Gamble,

okay? This type of thing. So dividends stocks do not have as good a rate of return as regular

stock that's growing in a company.

You're basically pulling it out. It's not going to grow anymore. You're cashing in

your chips at the end of the game. You're saying I'd rather get the money now and not continue

to let it. And so you didn't, you know, so for instance, if the stock market went up 20% in one

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