Quote: "And no, they don't protect you in the event of a crash. 1% of a 50 euro share value is not the same as 1% of a 25 euro share value. Strange that you have to explain this to "educated people"." - The dividend itself does not protect against a crash, but it has a stabilizing effect on the share price. If Coca Cola falls by 50% tomorrow because of some general market crash like Corona, then you can buy the stock tomorrow with a 6.5% dividend yield if Coca Cola doesn't lower the dividend, which they haven't done in the last 60 years. With such yields, new buyers would quickly buy into the stock again, which would then drive the price up again. That is why such shares do not fall as low as the market in the event of a crash.
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@Paketknecht I have already written something similar above. These are the people who have been on the stock market for a year and think they are the biggest. They just haven't experienced crises, crashes and bad years/decades.
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•@Paketknecht Where does the money for a dividend come from? And what is 6.5% of 25 euros and 6.5% of 50 euros?
And why should the dividend remain the same if Coke crashes? Seeb 3m. A company cannot simply print money, if it is financially affected the obligation to maintain the dividend is difficult to meet or even problematic, as the money is needed for other things.
And why should the dividend remain the same if Coke crashes? Seeb 3m. A company cannot simply print money, if it is financially affected the obligation to maintain the dividend is difficult to meet or even problematic, as the money is needed for other things.
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@Hotte1909 Another one of those who can't do math. Where does your free money always come from? Can you please share the spell.
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@Madhatter5566 it just depends on the layout. You mention 3m as an industrial stock here. Be careful when choosing shares. Did $KO lower its dividend in the years 2000-2015? No. There are companies that are at the bottom of the food chain and can afford to increase their dividends over 50 years. Logically, the percentage dividend yield increases when the share price falls. However, your purchase price remains the same and if dividends continue to rise, your dividend yield also rises even though the share price falls. The money is drawn from the profits of a company. Just take a look at who pays out the most money for dividends. It's no surprise that it's not the dividend stocks you suspect, but companies like Microsoft etc
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•@Hotte1909 What are you talking about: 3m was an example that when the crash (or something else) comes the dividends immediately fall or are suspended. To say "But company X is stable and is never not affected by the crash and therefore the dividend strategy is totally crisis-proof" is stupid and completely misses the point. Yes, as I wrote, there are companies that pay dividends and are stable. Just as there are companies that grow steadily every year. That's not the issue. As soon as they are affected, dividends also go downhill. Those who live from dividends suddenly have none. What do you do then? Sell part of the stock when the price is also in the basement? That's great.
1. crash: If the dividend company is affected by a crash, not only will your share price fall and the dividend remain the same, but your dividend will be reduced. Even if the dividend yield remains the same. Then you have no cash flow and still a 50% price loss. Please calculate again what 5% of 25 Euro share value is and what 5% of 50 Euro share value is. Then please report back what you have found out.
2. there is no difference between annual growth or an increasing dividend yield and reinvestment in terms of profit. Glorifying dividends makes no sense at all in the selection of companies, as you could also sell some of them. If you disagree, I would be happy to calculate how a dividend that has no influence on the share value when reinvested (since the value of the dividend is deducted from the share value and then paid in again; or even depresses the share value in the absence of reinvestment) somehow generates added value. Please!
3. please share your spell. Please.
1. crash: If the dividend company is affected by a crash, not only will your share price fall and the dividend remain the same, but your dividend will be reduced. Even if the dividend yield remains the same. Then you have no cash flow and still a 50% price loss. Please calculate again what 5% of 25 Euro share value is and what 5% of 50 Euro share value is. Then please report back what you have found out.
2. there is no difference between annual growth or an increasing dividend yield and reinvestment in terms of profit. Glorifying dividends makes no sense at all in the selection of companies, as you could also sell some of them. If you disagree, I would be happy to calculate how a dividend that has no influence on the share value when reinvested (since the value of the dividend is deducted from the share value and then paid in again; or even depresses the share value in the absence of reinvestment) somehow generates added value. Please!
3. please share your spell. Please.
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@Madhatter5566 You also just like to talk thin and deliberately ignore the feedback you receive if it doesn't fit your story. Re 1) Dividend is being reduced? No cash flow? Why the heck would the cash flow fall if the share price falls? 5% of €50 vs. 5% of €25, what are you talking about again? What does that have to do with my personal dividend yield whether the share price is €25 or €5,000? As if the dividend were somehow linked to the share price.
Your statements are simply not universally valid, just Google "dividend aristocrat", maybe that will broaden your horizons
Your statements are simply not universally valid, just Google "dividend aristocrat", maybe that will broaden your horizons
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•@Cype So you think that absolutely nothing will change if your share price falls. Roflmao.
Of course the dividend will decrease if your share price drops. But what else? Do the math and see what happens. Where does your damn magic money come from?
Of course the dividend will decrease if your share price drops. But what else? Do the math and see what happens. Where does your damn magic money come from?
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@Madhatter5566 You're always calculating. As if this is somehow about elliptical curves or something. Demanding at best. I don't need to do the math, my bank statement is enough for me. Maybe you'd like to do the math yourself and present me with your results. Please calculate the decline in dividends of my IBM position over the last 10 years. Thank you!
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@Madhatter5566 The dividend is paid out of the free cash flow. In a strong company, the payout ratio from FCF is usually around 30-70%, so there is still room for improvement and it can also be compensated for in the event of a crash.
Of course, if you have a company that is already bobbing around at ~90% and a crash also tears up the share price, the dividend will probably be suspended or cut.
Of course, if you have a company that is already bobbing around at ~90% and a crash also tears up the share price, the dividend will probably be suspended or cut.
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@Madhatter5566 Your statements are simply not correct, the dividend does not decrease when the share price falls. Check again exactly what you are writing here and relax a bit. 😄
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