Theoretically, you can explain everything rationally from an ivory tower and have THE ONE TRUTH. Unfortunately, this often does not match the reality of people. (I'm not referring to the person who wrote the post, but to people in general ^^)
As many have already written, dividends are perceived by many people as additional income, while selling shares makes you feel poorer. For me, this "feeling" is even true, because my shares will definitely go to zero at some point if I sell them every month. Most people don't think that about dividends, especially as BAT should probably have already gone bankrupt three times according to this logic, because with a 9% dividend yield the share would have to go to zero every 11 years.
Another advantage that should not be underestimated is that dividends simply come and you don't have to do anything yourself. This is also a convenience that many people appreciate. A small point that I may have overlooked. Dividends generally cost no fees, whereas selling shares at "normal" banks costs around EUR 10.
And basically, I always find it a pity in such discussions that stocks are supposed to be created here again. Even the "irrational" dividend investor is better than someone who doesn't invest at all. Wouldn't it be better to get more people into investing instead of confusing beginners even more with such trench warfare?
As many have already written, dividends are perceived by many people as additional income, while selling shares makes you feel poorer. For me, this "feeling" is even true, because my shares will definitely go to zero at some point if I sell them every month. Most people don't think that about dividends, especially as BAT should probably have already gone bankrupt three times according to this logic, because with a 9% dividend yield the share would have to go to zero every 11 years.
Another advantage that should not be underestimated is that dividends simply come and you don't have to do anything yourself. This is also a convenience that many people appreciate. A small point that I may have overlooked. Dividends generally cost no fees, whereas selling shares at "normal" banks costs around EUR 10.
And basically, I always find it a pity in such discussions that stocks are supposed to be created here again. Even the "irrational" dividend investor is better than someone who doesn't invest at all. Wouldn't it be better to get more people into investing instead of confusing beginners even more with such trench warfare?
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@_xempex_ what about missing out on compounding. Imagine BaTS reinvesting same capital in growing their firm rather than distributing the profits? That would actually result in greater price increase.
You need to understand the dividends are not magically genenerated but rather come at a cost of lower price.
And if you argue one can simply reinvest the dividends then I point you to your argument that it takes 10 eur to invest again that sub 100 eur divident you receive every quarter.
You need to understand the dividends are not magically genenerated but rather come at a cost of lower price.
And if you argue one can simply reinvest the dividends then I point you to your argument that it takes 10 eur to invest again that sub 100 eur divident you receive every quarter.
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@reach2ashish but even this is a highly theoretical construct assuming BAT would put every Euro to perfect use instead of spending it on dividends. There is also the risk of "diworsification" as Peter Lynch wrote.
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•@_xempex_ the share would never go to zero unless there was a 100% dividend payout. I would like to classify this case as impossible. The same applies to the sale of shares. Never zero. Simple math. That must be clear. This means that the "filled" examples are meaningless, as the basis is built on false assumptions
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