Investing is all about earning the highest return possible, while minimizing risk. Of course, there are many routes investors can take to reach this destination.

Two of the most common ways people invest, is in the stock market, and in real estate.

The subject of dividend stocks versus real estate is a complex topic, with no one right answer. What works for one individual may not work for someone else.

As a result, there are many different viewpoints on the subject. If you were to ask 10 different investors which is better, you might get 10 different answers.

There are pros and cons to each strategy, although studies have shown over the years that one approach may indeed be better than the other.

This article will discuss the various advantages and disadvantages of dividend investing versus real estate investing.

Dividend Investing Pros and Cons

Investing in stocks has been one of the best ways to build wealth over the long-term. Consider the historical performance of the S&P 500 Index:

Source: Multpl.com

The S&P 500 Index recently closed at 2,376.98.

On January 1, 2017, the S&P 500 Index was at 2,275.12. On January 1, 1871, the index was at 4.44 points.

Over that 146-year period, the S&P 500 returned 4.4% per year, on average, after inflation.

Dividend stocks can be even more rewarding.

Take, for example, the list of Dividend Aristocrats, a group of companies in the S&P 500 that have raised dividends for 25+ years.

The S&P Dividend Aristocrats have consistently outperformed the broader index, by more than two percentage points per year.

Source: Standard & Poor’s

The beauty of investing in dividends versus real estate, is that dividend stocks pay you to own them, not the other way around.

Dividend stocks are an especially attractive option for retirees, because dividend income can help replace lost wages after retirement, at a much lower cost than investing in real estate.