1Lun·

Dividends: Passive income or deceptive security? 🍀

Dividends are an important part of the investment strategy for many investors. But while some swear by regular payouts, others take a critical view of dividends. In this article, we take a closer look at the pros and cons of dividends.

✅ Advantages of dividends

📈 Passive income

Dividends provide regular income without having to sell shares. They are particularly attractive for long-term investors or as a supplement to a pension.

🏛 Stable companies

Many companies with a long dividend history (e.g. Coca-Cola, Johnson & Johnson) are established, profitable companies with solid business models.

🔄 Reinvestment & compound interest effect

By reinvesting dividends (e.g. via a savings plan), capital can grow exponentially in the long term.

📉 Protection in times of crisis

Dividend stocks are often less volatile than pure growth stocks and offer a certain degree of stability in the portfolio.

❌ Disadvantages of dividends

🚀 Slower growth

Companies that pay high dividends often invest less in their growth. Tech stocks such as Amazon or Tesla do not pay dividends, but are growing rapidly.

💰 Tax burden

In Germany, dividends are subject to withholding tax (26.375% incl. solidarity surcharge, church tax if applicable), which reduces the net yield.

🔻 No guarantee on distributions

Dividends are not guaranteed! Companies can reduce or cancel them if it is economically necessary (e.g. in times of crisis).

📊 Focus on incorrect key figures

Some investors are dazzled by high dividend yields without paying attention to the financial stability of the company. An excessively high payout ratio can be a warning signal.

🔎 Conclusion

Dividends offer stability and passive income, but are not a panacea. A good strategy can be a mix of dividend and growth stocks, depending on your personal investment objective. Anyone investing in dividend stocks should not only be guided by the yield, but should also check the quality of the company and the sustainability of the distributions.

💬 How do you feel about dividends? Do you rely on distributions or do you prefer pure growth?

$NOVO B (-1,18 %)
$PEP (-1,68 %)
$AGNC (+1,7 %)
$HAUTO (+2,43 %)
$KO (-1,3 %)

#etfs
#dividend
#dividende
#cashflow
#aktien

How do you feel about annual returns?

10 Comentarios

Maximilian@Max095

1Lun

I mainly focus on dividend growth.

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KoenigsRasse@KoenigsRasse

1Lun

@Max095 feel free to write in a few that you can recommend 👍

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Maximilian@Max095

1Lun

@KoenigsRasse the favorites from my portfolio are $CSL $NOVO B $UNH $BC8 $DE $MDLZ $ADP

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Dividendenopi👴@Dividendenopi

1Lun

There's no need for me to answer how I feel about dividends 😇 at the moment, my average gross dividend is €2000 per month. And that's just the beginning, until I've invested my cash over the course of the year. I live off it

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Nobody@Nobody_123

1Lun

This year it should be around 4500 euros.

My arguments for DIV are:
- Tech may grow fast and high, but you can only sell how much you have.
- you can theoretically play the game indefinitely with DIV
- but you need more capital

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Gomerdoc@Gomerdoc

1Lun

Companies with solid dividend growth, the longest possible dividend payout history, a solid business model and solid fundamental data:
They make millionaires.
Dividend alone: It's for the ar*** if the share price doesn't also grow solidly and steadily.
The personal dividend yield (current dividend in relation to the purchase price) is the measure of success.

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BenSC@BenSC

1Lun

2 Notes:
The final withholding tax naturally also applies to realized gains on shares that have not paid dividends.
IMHO, the shareholders usually decide on dividend payments at the AGM, not simply the company. They make and justify a proposal.

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Solitair@Solitair

1Lun

Go Quinn predicts that I'll net around €12,000 this year. But that's probably not going to happen. I'm realistically expecting maybe €10000. Originally, I wasn't on the dividend trip, but now I see it like this: what I have, I have. However, my dividend yield is rather low as I still have a large proportion of non-distributing ETFs.
From a total return point of view, however, I would probably have been better off simply taking an accumulating MSCI World or something like that. Instead, I even took up a pure dividend ETF for the first time this year with $TDIV

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Thomas@Thomas_1963

2Semana

@Solitair Good decision. The only ETF that, together with gold, is still up.

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Thomas@Thomas_1963

2Semana

Has the current assessment changed?

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