6Mês
Under every post in which someone presents their dividends or states the dividend strategy as a goal, at least one person comes forward who declares all people who do this to be stupid. 🤮
I have significantly more dividends in my portfolio every quarter than in the same period of the previous year - and that's great. I can use it to buy new shares every month that pay me even more dividends. Then there are the dividend increases. Some shares have been increasing their dividends every year for 20, 30, 50 years and more, thus increasing my income.
I'm currently using this to buy more shares, but at some point this will be my pension - without going to the bottom.
The strategy of selling shares is dangerous, because if an idiot flies into office towers somewhere, someone imposes tariffs on the whole world, a bank crashes or something else, I have to sell a lot more shares for the same money and my assets run out faster. And above all, how many years is the sale geared towards? Incidentally, nobody with one, two or ten condominiums sells shares every month, but also lives off the income.
I have significantly more dividends in my portfolio every quarter than in the same period of the previous year - and that's great. I can use it to buy new shares every month that pay me even more dividends. Then there are the dividend increases. Some shares have been increasing their dividends every year for 20, 30, 50 years and more, thus increasing my income.
I'm currently using this to buy more shares, but at some point this will be my pension - without going to the bottom.
The strategy of selling shares is dangerous, because if an idiot flies into office towers somewhere, someone imposes tariffs on the whole world, a bank crashes or something else, I have to sell a lot more shares for the same money and my assets run out faster. And above all, how many years is the sale geared towards? Incidentally, nobody with one, two or ten condominiums sells shares every month, but also lives off the income.
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6Mês
@AlterMann Great comment, no bullshit. I have a question though, wouldn't it be the case in a horror scenario that share values would fall and you would have to sell more shares to make ends meet, but wouldn't it be different for dividend stocks? Don't companies usually pay out less in such a case?
This is a serious question.
This is a serious question.
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@Yasin21
There have been a number of events in recent years that have caused share prices to fall sharply.
How well or badly companies come through this depends on many circumstances. If there are companies that are so solidly positioned despite these negative events that their business remains almost constant, there are sufficient reserves and they react quickly and correctly, then they are worth investing in. If these companies can continue to pay their dividends and even increase them annually, that is a sign of quality.
Search for dividend aristocrats.
It is also a fact that dividends are not guaranteed. We can get up tomorrow and there have been events that have also caused these companies to falter and the dividend is cut or canceled altogether.
There have been a number of events in recent years that have caused share prices to fall sharply.
How well or badly companies come through this depends on many circumstances. If there are companies that are so solidly positioned despite these negative events that their business remains almost constant, there are sufficient reserves and they react quickly and correctly, then they are worth investing in. If these companies can continue to pay their dividends and even increase them annually, that is a sign of quality.
Search for dividend aristocrats.
It is also a fact that dividends are not guaranteed. We can get up tomorrow and there have been events that have also caused these companies to falter and the dividend is cut or canceled altogether.
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•@AlterMann that’s a good point. There are some good companies that pay dividends but still grow. That means that at some point you can have dividend yield of 50 or 60% (or even more) just because you bought the the stock at a cheaper price.
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6Mês
@AlterMann Dividend stocks usually have a worse price performance, as every time they pay a dividend the price goes down as a consequence. At the same time you pay taxes on that dividend...
On the other hand a company that does not pay dividend but repurchase shares or reinvest, makes the price go up, adding value to the investor in a different way, and avoiding the tax on the dividend. If you're going to reinvest in the same company then it would be better not to have the dividend on the first place, but if not, it gives you the chance of placing that money on a different stock.
All strategies are fine, usually you'll get higher returns for companies without dividends as if you pick right the compound interest is going to make it go faster, a the same time companies with dividend are more settled and usually growth rate is lower. If they had something grate to invest in to give more value to shareholders, they'd cut dividend and do it.
In my opinion, if you're young and are accumulating, non dividend companies/ETFs/Funds are a better option for higher long term returns. And if you're not going to invest in specific companies, I like funds better than ETFs as (at least in Spain) you can move the money from one fund to a different one without paying for your capital gains, so you'd be able to accumulate in a growth non dividend fund, and latter on your life if you want less risk and dividend, just move it to a different fund, without paying capital tax on that movement. And this is obviously a generalization, I'm not saying you can't make more money on a dividend strategy that on a non dividend one, that will depend on how good are you picking investments at the end!
On the other hand a company that does not pay dividend but repurchase shares or reinvest, makes the price go up, adding value to the investor in a different way, and avoiding the tax on the dividend. If you're going to reinvest in the same company then it would be better not to have the dividend on the first place, but if not, it gives you the chance of placing that money on a different stock.
All strategies are fine, usually you'll get higher returns for companies without dividends as if you pick right the compound interest is going to make it go faster, a the same time companies with dividend are more settled and usually growth rate is lower. If they had something grate to invest in to give more value to shareholders, they'd cut dividend and do it.
In my opinion, if you're young and are accumulating, non dividend companies/ETFs/Funds are a better option for higher long term returns. And if you're not going to invest in specific companies, I like funds better than ETFs as (at least in Spain) you can move the money from one fund to a different one without paying for your capital gains, so you'd be able to accumulate in a growth non dividend fund, and latter on your life if you want less risk and dividend, just move it to a different fund, without paying capital tax on that movement. And this is obviously a generalization, I'm not saying you can't make more money on a dividend strategy that on a non dividend one, that will depend on how good are you picking investments at the end!
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@AlterMann Thank you. I feel the same way.
Of course you can do it differently, but it depends 1) on your life situation 2) on how you feel about it.
I feel better 'consuming' a dividend than selling shares and consuming the money. If I don't need the dividend, I can always reinvest it and use the reinvest to rebalance the portfolio.
And: No, there are also shares that pay dividends and still achieve price gains. If that wasn't the case, it would be bad. 😉
Of course you can do it differently, but it depends 1) on your life situation 2) on how you feel about it.
I feel better 'consuming' a dividend than selling shares and consuming the money. If I don't need the dividend, I can always reinvest it and use the reinvest to rebalance the portfolio.
And: No, there are also shares that pay dividends and still achieve price gains. If that wasn't the case, it would be bad. 😉
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@AlterMann those people clearly haven’t looked at the data of reinvesting dividends long-term. Google an article about the 30 businesses that have compounded the most real wealth for investors over the previous 30 years; some of the numbers are crazy. Exxon (if I recall correctly) had around 300% gains over the period, but with reinvested dividends it was over 800%. And every book by Neff, Dreman, about Buffet, & plenty of others, are full of supporting data 🤷♂️ lot of people do things based on opinion for some reason. I need to see the data 😂
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@AlterMann The interesting thing is that everyone thinks it will still be possible to sell shares in, say, 20 years' time without paying significantly more tax or duties. And that is definitely not the case. The trend is moving more and more towards asset recording and digitalization by the state. I am therefore betting on a mix of dividend and growth stocks. It can never be wrong to use dividends now for additional purchases.
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