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Frequent Contributor

Re: What if dividends dry up?


@Bentley wrote:

@Intruder wrote:

@ECEPROF wrote:

FD

I make my money in my way, and you can make your money in your way. In my book, growth and growth rates are important to make money in the long run. So, unless US bonds pay at least 5% (1% goes to pay the taxes), people cannot make a living investing in US bonds. So, I will not touch US bonds, not just 10 ft pole, not even with a 50 ft pole. That is the end of story. Does not matter to me what else you have to say.


 

Additional observation.
FD is acting like Brantley comparing apples and oranges by showing graphs and charts of the performance of T, a high dividend stock to MSFT, a growth stock with different performance metrics. I own T as a bond proxy which pays a 7% qualified dividend. I own MSFT Because it is a high growth stock. I prefer receiving the T dividends because I dont have to sell shares to cover expenses when prices decline as happened from March to May. Dividends kept rolling in. Appreciation on my T shares Will be passed on to my heirs as stepped up basis. For growth I own AAPL, AMZN, NFLX, MSFT, QQQ, HD, WMT and pharma.

 

 


 Trudy,

 Stop with your poorly formed and misleading theories. Inserting my name in your posts while claiming not to engage me is both non-productive and abusive. Using established market benchmarks is accepted practice on Wall Street, academia, and retail investing. I have never compare MSFT to anything EVER!


Brantley

is this the only topic on which you can post? I will leave it to the other posters to determine if you add anything of value. If you think my post is abusive then report me. Any discussions with you are a waste of time because you continue to recycle the same Apple to oranges analysis in every post.

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Frequent Contributor

Re: What if dividends dry up?


@Intruder wrote:

@Bentley wrote:

@Intruder wrote:

@ECEPROF wrote:

FD

I make my money in my way, and you can make your money in your way. In my book, growth and growth rates are important to make money in the long run. So, unless US bonds pay at least 5% (1% goes to pay the taxes), people cannot make a living investing in US bonds. So, I will not touch US bonds, not just 10 ft pole, not even with a 50 ft pole. That is the end of story. Does not matter to me what else you have to say.


 

Additional observation.
FD is acting like Brantley comparing apples and oranges by showing graphs and charts of the performance of T, a high dividend stock to MSFT, a growth stock with different performance metrics. I own T as a bond proxy which pays a 7% qualified dividend. I own MSFT Because it is a high growth stock. I prefer receiving the T dividends because I dont have to sell shares to cover expenses when prices decline as happened from March to May. Dividends kept rolling in. Appreciation on my T shares Will be passed on to my heirs as stepped up basis. For growth I own AAPL, AMZN, NFLX, MSFT, QQQ, HD, WMT and pharma.

 

 


 Trudy,

 Stop with your poorly formed and misleading theories. Inserting my name in your posts while claiming not to engage me is both non-productive and abusive. Using established market benchmarks is accepted practice on Wall Street, academia, and retail investing. I have never compare MSFT to anything EVER!


Brantley

is this the only topic on which you can post? I will leave it to the other posters to determine if you add anything of value. If you think my post is abusive then report me. Any discussions with you are a waste of time because you continue to recycle the same Apple to oranges analysis in every post.


 

 You are very well aware of what I have posted on. Do you need a reminder? And if I am such a waste of your time why do you keep posting my name in your posts? I don't insert your in my posts.

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Employee
Employee

Re: What if dividends dry up?

1- Dividends do get cut from many company's/sectors (just look at REITS and Energy).

2 - The key is having a diversified portfolio in many asset classes / sectors.  You should never concentrate a portfolio into 1 sector like 100% in Financial companies (100% in tech, etc..)...  If you have a well diversified portfolio it will help reduce downside risk over time.

3 - With same theme of well diversified portfolio, it is of great importance to buy mostly historical dividend growth stocks/funds.  A dividend growth stock is one that increases the distribution (dividend) every year after 4 quarters.

A combination of diversification and dividend growth stocks limits your downside risk over long term and maintains your income.  So as an example you have a portfolio with 10 stocks (3 cut there dividend), but the remaining 7 stocks increase there distribution (dividend) which helps with downside risk of the 3 stocks that cut there distribution.

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Explorer ○○○

Re: What if dividends dry up?

Borosp, think you nailed it.

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Frequent Contributor

Re: What if dividends dry up?


@borosp wrote:

1- Dividends do get cut from many company's/sectors (just look at REITS and Energy).

2 - The key is having a diversified portfolio in many asset classes / sectors.  You should never concentrate a portfolio into 1 asset class like 100% in Financial companies (100% in tech, etc..)...  If you have a well diversified portfolio it help reduce downside risk over time.

 

+1

"Harry Markowitz (1927- ) is a Nobel Prize winning economist who devised the modern portfolio theory, introduced to academic circles in his article, "Portfolio Selection," which appeared in the Journal of Finance in 1952. Markowitz's theories emphasized the importance of portfolios, risk, the correlations between securities, and diversification. His work, in collaboration with Merton H. Miller and William F. Sharpe, changed the way that people invested. These three intellectuals shared the 1990 Nobel Prize in Economics. Markowitz is currently a professor at the Rady School of Management of the University of California at San Diego."

 

 

 

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Frequent Contributor

Re: What if dividends dry up?


@borosp wrote:

1- Dividends do get cut from many company's/sectors (just look at REITS and Energy).

2 - The key is having a diversified portfolio in many asset classes / sectors.  You should never concentrate a portfolio into 1 asset class like 100% in Financial companies (100% in tech, etc..)...  If you have a well diversified portfolio it will help reduce downside risk over time.

3 - With same theme of well diversified portfolio, it is of great importance to buy mostly historical dividend growth stocks/funds.  A dividend growth stock is one that increases the distribution (dividend) every year after 4 quarters.

A combination of diversification and dividend growth stocks limits your downside risk over long term and maintains your income.  So as an example you have a portfolio with 10 stocks (3 cut there dividend), but the remaining 7 stocks increase there distribution (dividend) which helps with downside risk of the 3 stocks that cut there distribution.


The simple solution which has worked well for me is to receive more than enough income from different sources that are well in excess of expenses and taxes. I use tax efficient investing techniques to minimize taxes. My investment income, SS, retirement distributions and other income  exceed my income needs by 50%. I elect to receive my IRA RMDs in kind as shares of stock where the dividends add to my investment income and the future appreciation will get stepped up basis.I also have additional sources of income such as a large Roth IRA invested in FAAMNG, HD and QQQ where I can take non taxable withdrawals. 

Investors need to start early to implement their retirement plans.I made incremental Roth conversions over 6 years before I started RMDs which reduced my taxable retirement benefits by 1/3 which in 2020 reduced my RMDs by 30k and keeps me in a lower tax bracket to avoid higher Medicare premiums. I also elected to commence SS at 65 to pay for expenses while I converted IRAs to Roth’s. The lower SS payments from starting SS at 65 reduce taxable Income  but under SS actuarial tables will result in the same amount of total SS benefits paid to me if I live to my SS life expectancy of 83 as I would receive had I deferred commencing benefits until 70.

 

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