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Why Dividend Growth Investing Is Better Than Index Investing?

An article on "Why Dividend Growth Investing is Better Than Index Investing?" Any thoughts on the subject? The three main reasons are little to no cost with lack of commissions, more control, and don't have to sell assets to fund retirement. On the other hand index investing is very simple and more diversified across asset classes. In any case, the article link is below.

Why Dividend Growth Investing is Better Than Index Investing?

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Re: Why Dividend Growth Investing Is Better Than Index Investing?


@rpkrpi wrote:

An article on "Why Dividend Growth Investing is Better Than Index Investing?" Any thoughts on the subject? The three main reasons are little to no cost with lack of commissions, more control, and don't have to sell assets to fund retirement. On the other hand index investing is very simple and more diversified across asset classes. In any case, the article link is below.

Why Dividend Growth Investing is Better Than Index Investing?


@rpkrpi 

It's good to look at the core issues raised, so that's a positive.  However, the analysis is thin with no results shown other than this camp says this and this camp says that.  It also builds barriers when none exist, i.e., why does it have to be one way or the other.  However, let's look at taxable accounts only because the issues are quite different for tax-deferred.  In the article, they make the point that purchasing stocks has no transactional costs but ... somehow NOT selling those stocks is somehow a benefit.  Well, that buy and hold for the dividend logic just got a huge wakeup call in March with reducing dividends and stock prices.  So, if you owned Royal Dutch you were much better off selling the stock, taking the long term loss and buying the stock back (after 31 days).  That's if you still feel good about the long-term prospects of refiners and the dividend.  

Another benefit not mentioned is taking capital gains WHEN you want to take them.  Dividends come when the company wants to give them, so your tax bill is what it is.  However, for some people, deciding WHEN to take gains (or not) can be quite advantageous.   

ctyankee

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Re: Why Dividend Growth Investing Is Better Than Index Investing?

Better how? For whom? Why? See the pattern?

VT --> VTI--> VIG--> QQQ--> FAANGM--> NFLX

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Re: Why Dividend Growth Investing Is Better Than Index Investing?


@ctyankee wrote:

@rpkrpi wrote:

An article on "Why Dividend Growth Investing is Better Than Index Investing?" Any thoughts on the subject? The three main reasons are little to no cost with lack of commissions, more control, and don't have to sell assets to fund retirement. On the other hand index investing is very simple and more diversified across asset classes. In any case, the article link is below.

Why Dividend Growth Investing is Better Than Index Investing?


@rpkrpi 

It's good to look at the core issues raised, so that's a positive.  However, the analysis is thin with no results shown other than this camp says this and this camp says that.  It also builds barriers when none exist, i.e., why does it have to be one way or the other.  However, let's look at taxable accounts only because the issues are quite different for tax-deferred.  In the article, they make the point that purchasing stocks has no transactional costs but ... somehow NOT selling those stocks is somehow a benefit.  Well, that buy and hold for the dividend logic just got a huge wakeup call in March with reducing dividends and stock prices.  So, if you owned Royal Dutch you were much better off selling the stock, taking the long term loss and buying the stock back (after 31 days).  That's if you still feel good about the long-term prospects of refiners and the dividend.  

Another benefit not mentioned is taking capital gains WHEN you want to take them.  Dividends come when the company wants to give them, so your tax bill is what it is.  However, for some people, deciding WHEN to take gains (or not) can be quite advantageous.   

ctyankee


While it’s easy to point out that RDS lowered its dividend you failed to note that other stocks such as AAPL, PG  and JNJ raised their dividends This year. Since no one can Predict when a dividend can be cut, investors should make sure their dividends Are well in excess of their need for income to pay expenses so that a dividend cut in a stock portfolio will not affect expenses that need to be paid from dividends. My excess dividends are reinvested in equities including dividend stocks such as AAPL, MSFT, CVX and JNJ.

 

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Re: Why Dividend Growth Investing Is Better Than Index Investing?


@Intruder wrote:

@ctyankee wrote:

@rpkrpi wrote:

An article on "Why Dividend Growth Investing is Better Than Index Investing?" Any thoughts on the subject? The three main reasons are little to no cost with lack of commissions, more control, and don't have to sell assets to fund retirement. On the other hand index investing is very simple and more diversified across asset classes. In any case, the article link is below.

Why Dividend Growth Investing is Better Than Index Investing?


@rpkrpi 

It's good to look at the core issues raised, so that's a positive.  However, the analysis is thin with no results shown other than this camp says this and this camp says that.  It also builds barriers when none exist, i.e., why does it have to be one way or the other.  However, let's look at taxable accounts only because the issues are quite different for tax-deferred.  In the article, they make the point that purchasing stocks has no transactional costs but ... somehow NOT selling those stocks is somehow a benefit.  Well, that buy and hold for the dividend logic just got a huge wakeup call in March with reducing dividends and stock prices.  So, if you owned Royal Dutch you were much better off selling the stock, taking the long term loss and buying the stock back (after 31 days).  That's if you still feel good about the long-term prospects of refiners and the dividend.  

Another benefit not mentioned is taking capital gains WHEN you want to take them.  Dividends come when the company wants to give them, so your tax bill is what it is.  However, for some people, deciding WHEN to take gains (or not) can be quite advantageous.   

ctyankee


While it’s easy to point out that RDS lowered its dividend you failed to note that other stocks such as AAPL, PG  and JNJ raised their dividends This year. Since no one can Predict when a dividend can be cut, investors should make sure their dividends Are well in excess of their need for income to pay expenses so that a dividend cut in a stock portfolio will not affect expenses that need to be paid from dividends. My excess dividends are reinvested in equities including dividend stocks such as AAPL, MSFT, CVX and JNJ.

 


@Intruder 

That's comical.  My point is around the possible advantages of tax implications when one owns stocks versus indexes. It's not predicting dividend cuts, it's the ability to leverage tax advantages around those cuts (along with the reduction of the stock price).   Obviously (or what should be obvious) is that we're not submitting white papers here.  Merely, posts.  So, the only failure here is your grasp of that.  

Not to be mean-spirited, but when companies like AAPL and MSFT have 40+ percent growth in the last year and you tag them as dividend stocks with measly 1 percent (or less) dividends ... please.  

Finally, in my view, some blanket statement suggesting that investors ensure that their dividends yield more than their income requirements (to protect against dividend losses) is unsound advice for many investors.  For many, chasing yield is folly.      

ctyankee

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Re: Why Dividend Growth Investing Is Better Than Index Investing?


@rpkrpi 
 

          Ha. Ha. Back causing trouble again. I don’t believe either is better. Both have advantages and disadvantages. We saw close up managing our parents investments the way they wanted. We just modified the method we knew already that worked for 35 years+.

           I believe 70% of the time markets have up years and you have to learn how to take profits for example NFLX plus AAPL currently or any fund and index. The other 30% is like now although cap gains can be had in tech this time. If your too conservative you miss out on the 70%. If you take too much risk you may have to spend down from paper losses.

             Notice how the above is close to 60/40. We invested about 40-50% for income, high risk CEF’s in our plan and 50-60% in growth positions stocks and indexes. At this time we’re at about 55/45 growth to income. Since we’re locked down instead of voluntarily cutting back during this one we’re accumulating more extra income then usual dumping that in PONAX and taking cap gains from those crazy FAANG’s and dumping those in a more tame growth index fund.

               Of course investors have their own limits and plans. My point is set up a plan to take advantage of both methods and minimize the downside by not getting greedy. We have a 40 year old muni fund on reinvestment as backup to everything. A large reserve fund that let’s us take more risk to make paper values real gains whenever available. Income is more reliable but capital gains are more lucrative in a majority of markets.


 

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Explorer ○○

Re: Why Dividend Growth Investing Is Better Than Index Investing?

Interesting perspective ctyankee. But dividend are pretty much quarterly. By buying stocks that pay dividend in different months then you can essentially set up a monthly income stream. There are 321 dividend cuts from late-February to present. A few companies have started to reinstate the dividends. Most of the dividend cuts have been focused in a few industries.

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Explorer ○○

Re: Why Dividend Growth Investing Is Better Than Index Investing?

Dividend growth does not chase yield. It focuses on annual growth of dividends. Those that caused yield have in general gotten burned over the past few months.

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Re: Why Dividend Growth Investing Is Better Than Index Investing?

Lol! I do come back every now and then to post. Life is busy these days.

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Re: Why Dividend Growth Investing Is Better Than Index Investing?

We've been total return investors for 35 years. As non US investors our equity dividend cash income is subject to an unavoidable flat withholding tax of 12%. We get 88 cents on the dividend dollar.

We pay 0% tax on capital gains. So for us TR investing is better.

 

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