If you are not yet retired or about to retire, none at all.
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2Mon
@Psychedelic_Sunflower warum?
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What do you want with high dividends at a young age? If you use them to cover running costs, you are ruining the compound interest effect.
If you reinvest them, that is of course better, but you pay a lot of taxes, which is money that no longer works for you over time and greatly reduces the compound interest effect. In addition, the share price performance of companies with a high dividend yield tends to be moderate. In retirement, this cash flow would be exactly what you need to cover running costs and expenses, and then you would also pay a lot of taxes, but only later in life when your money has already worked hard for you.
If you still have a long investment horizon, opt for a mix of shares with strong price growth potential and high dividend growth.
Why? Many strong companies only have very low dividend yields of well below <1%, but regularly increase their dividends in the high single-digit to low double-digit range. If you now hold such a share for 20 years, you will still have a considerable personal dividend yield due to your low entry price. If you have any doubts, calculate your dividend yield for Apple shares, for example, which you would have bought 20 years ago. The share price back then was around 1 dollar, today the annual dividend is also 1 dollar. That's a 100% annual return, and rising! In addition, there are huge capital gains that you could still realize in old age and switch to a dividend share if the cash flow is not enough for you. You'll get significantly more cash flow out of it, even if this dividend share has made 200% over the 20 years. I mean, in the best case scenario, you will have increased your capital a hundredfold in that time. Apple is of course also a blatant example, but you will also see similar things with other companies.
The point is that companies that are able to regularly increase their dividends significantly are more likely to perform strongly and have the potential to grow further, as they do not spend a large part of their free cash flow on distributions to shareholders, but usually spend this money wisely on research and development and acquisitions, thus creating much greater added value for the shareholder.
You can do this by investing in high-dividend stocks, but be aware that this will most likely cost you returns, and not a little.
If you reinvest them, that is of course better, but you pay a lot of taxes, which is money that no longer works for you over time and greatly reduces the compound interest effect. In addition, the share price performance of companies with a high dividend yield tends to be moderate. In retirement, this cash flow would be exactly what you need to cover running costs and expenses, and then you would also pay a lot of taxes, but only later in life when your money has already worked hard for you.
If you still have a long investment horizon, opt for a mix of shares with strong price growth potential and high dividend growth.
Why? Many strong companies only have very low dividend yields of well below <1%, but regularly increase their dividends in the high single-digit to low double-digit range. If you now hold such a share for 20 years, you will still have a considerable personal dividend yield due to your low entry price. If you have any doubts, calculate your dividend yield for Apple shares, for example, which you would have bought 20 years ago. The share price back then was around 1 dollar, today the annual dividend is also 1 dollar. That's a 100% annual return, and rising! In addition, there are huge capital gains that you could still realize in old age and switch to a dividend share if the cash flow is not enough for you. You'll get significantly more cash flow out of it, even if this dividend share has made 200% over the 20 years. I mean, in the best case scenario, you will have increased your capital a hundredfold in that time. Apple is of course also a blatant example, but you will also see similar things with other companies.
The point is that companies that are able to regularly increase their dividends significantly are more likely to perform strongly and have the potential to grow further, as they do not spend a large part of their free cash flow on distributions to shareholders, but usually spend this money wisely on research and development and acquisitions, thus creating much greater added value for the shareholder.
You can do this by investing in high-dividend stocks, but be aware that this will most likely cost you returns, and not a little.
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22
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@Draqua1 take a look at the article by @DonkeyInvestor
https://getqu.in/GepPDm/ https://getqu.in/GepPDm/
https://getqu.in/GepPDm/ https://getqu.in/GepPDm/
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22
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