I partially agree with you. If I had to choose for a company I want to invest in if I want them to pay dividend or not, I'd say it is better if they don't pay dividend. This way for the same growth you compound more, as if you're going to reinvest your dividends you'll have paid taxes so the total invested is going to be less.
But when you're old, and you just want a monthly payment and forget a bit about the market, dividend strategy is nice, specially if your dividend payers are good companies. It depends on your needs and the atention you want to pay to the market. Usually, dividend payers are strong big companies, with a stable business, stable earnings and income, moderate growth...
In many countries, yo pay taxes depending on what you sell, so for instance if you do a non dividend strategy and were to sell everyhting you had in invested in your life and the profit is huge, you'd need to sell partially year by year to aboid excess tax paying, when with dividends you'll always be paying the minimnum (unless you have a really nice amount of money in the market with dividend payers) as you're already lowering the value of the price apreciation with the dividends.
About $O i think that it is not a good example to compare a stock with an index at an specific point... The stock value of $O went down hard this last years due to the high interest rates, and it is far from the performance it has had over the years. It should apreciate if the interests go down again. If you take this comparison to before 2020 you'd see that the return is almost the same, and if you go to other times the return of $O was better. You can't compare a specific moment like this, this is like if you take Meta 2 years ago when it went down from 320€ to 98€, and now is back up at almost 600€.
But when you're old, and you just want a monthly payment and forget a bit about the market, dividend strategy is nice, specially if your dividend payers are good companies. It depends on your needs and the atention you want to pay to the market. Usually, dividend payers are strong big companies, with a stable business, stable earnings and income, moderate growth...
In many countries, yo pay taxes depending on what you sell, so for instance if you do a non dividend strategy and were to sell everyhting you had in invested in your life and the profit is huge, you'd need to sell partially year by year to aboid excess tax paying, when with dividends you'll always be paying the minimnum (unless you have a really nice amount of money in the market with dividend payers) as you're already lowering the value of the price apreciation with the dividends.
About $O i think that it is not a good example to compare a stock with an index at an specific point... The stock value of $O went down hard this last years due to the high interest rates, and it is far from the performance it has had over the years. It should apreciate if the interests go down again. If you take this comparison to before 2020 you'd see that the return is almost the same, and if you go to other times the return of $O was better. You can't compare a specific moment like this, this is like if you take Meta 2 years ago when it went down from 320€ to 98€, and now is back up at almost 600€.
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@Carles You are correct that dividends are a good way to deinvest. My point was that it isnt technically any different then selling a small position when you need the money. You are even more flexible doing so, as you can withhold selling if there is a immediate crash at hand. You cant withhold dividends, as the date is fixed.
Looking at dividends like a selling action shows that there isnt any "benefit" of dividends when you are still investing. As you only waste trade costs, have spread reinvesting them. Yes, you would have that too when deinvesting manually, yet these costs are better at the end, not at the beginning of investing (1 Euro saved now is 10-20 Euro in retirement).
And specificly I mean the believe that dividends somehow generate or compound more if reinvested against a similiar share whitholding dividends.
Looking at dividends like a selling action shows that there isnt any "benefit" of dividends when you are still investing. As you only waste trade costs, have spread reinvesting them. Yes, you would have that too when deinvesting manually, yet these costs are better at the end, not at the beginning of investing (1 Euro saved now is 10-20 Euro in retirement).
And specificly I mean the believe that dividends somehow generate or compound more if reinvested against a similiar share whitholding dividends.
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•@Madhatter5566 agreed
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