/biz/ - Business & Finance

>dividend investing general /dig/

>>56943070
Based

>>56943030
I' big on at&t, basf, mmm and dow for the high return rates

>>56943303
I like the mix of high yielding stocks and low yield, high dividend growth stocks

Any good divvy etfs for europoors? Do etfs even make sense for dividends?

>>56943303
I don't really like T's recent performance, it's been losing money for investors since around 2013. I don't mind high distributions necessarily but I think that particular stock is just a trap unless you see a reason their business will turn around.

Looks like my COST just hit an ATH. One of my forever holds

>>56943030
>investing this much in microsoft

Dividends are irrelevant in an idealized market — one with no mispricings that you can reliably exploit, no taxes, no transaction costs:
https://www.youtube.com/watch?v=f5j9v9dfinQ

>The researchers are wrong
That's very unlikely. If you proved that Miller and Modigliani's famous research on dividends was wrong on its own terms, you'd quickly become a celebrated intellectual.

>But real markets aren't ideal
You're right. Keep reading this.

>But there are mispricings I can reliably exploit
Then make money by exploiting your special knowledge of stock valuations. Don't worry about dividends per se.

>But tax treatment of dividends is significant for me
Fair enough. Seek or avoid dividends based on your tax situation (but as little as possible, because it's valuable for your portfolio to be broadly diversified).

>But transaction costs are high for this stock (for example, it's not publicly traded)
Fair enough. Dividend policy might matter in your case.

>But pushing the "sell" button is so much work
No it's not. If you can handle buying securities, transferring money to and from your bank account, and reading an investing forum, then you can handle periodically selling shares.

>But dividends prove that the company is making genuine profits, that its management actually works for the shareholders' benefit, etc. etc.
Every investor can see that. So either it's already reflected in the price or it's a special case of "but there are mispricings I can reliably exploit."

>But some stocks have steady dividends, whereas the price at which I can sell shares fluctuates and is sometimes very low
Every investor can see that. So either it's already reflected in the price or it's a special case of "but there are mispricings I can reliably exploit."

>But I just like dividends
That's fine. But some people reading this thread want to maximize their investment returns and would benefit from knowing about the science.

XOM

>>56945004
Retaining and Paying a Dividend are NOT Equivalent

Even though dividends are not “free money”, the choice to receive and re-invest dividends is not the same as the company retaining 100% of its earnings. This is the most prevalent myth perpetrated – unknowingly – by those who claim that dividends are irrelevant.

Those arguing against the relevance of dividends provide the following argument. Let’s say a company’s stock is worth $10. In scenario A, it provides a $1 dividend. In scenario B, it retains its earnings. According to them, the two scenarios are equivalent because of the following math:

Scenario A – with a dividend
Total value = Dividend + (Stock Price – Dividend)

= $1 + ($10-$1) = $10

Scenario B – without a dividend

Total value = Stock price = $10

In other words, the total return is the same because the value of your stock drops by $1 after issuing the dividend (which is paid from the company’s assets). So according to them, this is like transferring money from one pocket to the other. Ben Felix – who has become famous, thanks to his well-known Youtube video on the “Irrelevance of Dividends”

>>56945004
But Ben Felix and others who repeat the above sentiment are wrong. While the math for the immediate stock price + dividend is the same because the dividends come out of the stock price, the difference behind the scenes is very large.

Re-Invested Dividends Buy Proven, Existing Cashflows

When you use your dividends to purchase additional shares in a company, you are purchasing more of the same, proven cashflow that the company has already demonstrated it can pull off. There’s no speculation. Mind, I’m not saying that dividends are guaranteed and that the company won’t cut them in the future. But the company has shown that it can generate the cashflow it already has, and you are using your dividends to buy more of the same.

In other words, you are using your dividends to purchase another tap, compared to retained earnings, where the company only promises to grow the size of the existing tap.
Each time you re-invest your dividends, you are purchasing another tap that already exists.

Retained Earnings are Only a Promise of Future Growth

When a company retains its earnings, it’s making the following promise to you:

I will invest this money into the company to generate at least the same returns as the one I’m generating now, if not more. These earnings will be in addition to my existing operations.

The last part is important. The company is promising to grow its business at an Internal Rate of Return (IRR) that is at least the same as what it is currently generating. That growth hasn’t happened yet. It is a speculation. It may never happen. There’s a good chance that the company will fail to generate higher returns on its retained earnings than what it is currently generating.

In general, I don’t believe that magical, revenue-growing opportunities are just randomly lying around in which companies can easily invest their retained earnings at a higher IRR than their already existing cashflow machine.

>>56945004
man I've only ever seen dividend stocks bleed over time.
which is retarded because supposedly the dividend is paid off profits.
never works that way, dividends are gay.
>no, anon, it's really a great investment!
>alright, how much capital have you invested and what percent did you make over time, from the dividends

>>56945104
>>56945122
These don't disprove dividend irrelevance. They were anticipated; see this section of the post they're replying to:
>But dividends prove that the company is making genuine profits, that its management actually works for the shareholders' benefit, etc. etc.

>>56945183
Selective viewing on your part which outs you as a retard
>>56945203
Yes it disproves dividend irrelevance which is why you flounder so hard everytime the relevance post is posted. Sorry it didn’t work out for you

>>56945004
>>56945104
This thread has been blessed by the anti-dividend autist.

Post on, /div/ senpai, and I hope you made bank on SCHD day.

>>56945268
refusing to answer the questions outs YOU as a retard.
the picture shows equity appreciation, which is the exact opposite of what I asked for.

>>56945291
You said bleed over time. Not knowing that bleed over time refers to share price or total return outs you as a retard

>>56945355
>alright, how much capital have you invested and what percent did you make over time, from the dividends
you're inability to read, outs you, as a retard.

>>56945399
In my dividend port? It’s a Roth IRA less than 2 years old so right around $9,000 invested. But are you new here? Why did you make a request to see performance without first posting a picture of your portfolio? Really weird

>>56945183
I invested a few thousand in EC at the end of the summer. So far it's paid me $259.69 in dividends and has unrealized capital gains of $197.10. Another distribution of about $1 per share will happen this month. I expect 15-25% total returns per year for the next couple years depending what happens to oil / recessions and most of that will probably be in dividends because the company has an aggressive distribution mandate.

A lot of companies that pay dividends, especially if the yield is very high, have to be carefully investigated. Stuff like ARR is cheap for a reason, they just issue shares to pay their bananas dividend and can't cover it with their profits.

Just buy SCHD. Shit like MMM crashed and burned and T never moves

>>56946031
for me it's ABR

>>56946031
SCHD's top holding is VZ which has underperformed SPY for 8 years and lost money for 4. As an ETF it's OK but you can do better.

dont buy just for divvies
that by itself does not make sense
buy a good business first at a good price
divvies are just a bonus (or a tax inefficiency by the corp towards the shareholder desu)

>>56946265
>As an ETF it's OK but you can do better.
What is a better ETF than SCHD?

>>56946306
I meant you can do better than just buying an ETF, although since you asked I think VIG is very competitive as an SCHD alternative and I like its top 20 holdings much better.

>>56947206
The thing is, VIG yield isn't that high, very close to VOO, might as well buy VOO at that point.

>>56947286
The TTM yield on VIG is 30% higher than VOO.

>>56945004
investors aren't rational

taxes exist, dividends and capital gains are taxed differently in different country's therefore investor preference exists

M&M assumes that companies and investors
can borrow at the same rate, they cant

M&M overlooks the impact of capital structure decisions as signals to the market about a company's future prospects

Dividend policies can help mitigate agency costs by reducing the free cash flow available to managers, potentially limiting inefficient investment or excessive risk-taking.

Issuing new shares to raise capital (if a company pays out most of its earnings as dividends) can incur significant flotation costs, which are not considered in the theory.

etcetera etcetera etcetera

>>56946031
While I do like SCHD's overall performance, I also think that some of their holdings are yield traps. Despite that, their results don't give a crap about my feelings towards VZ.

>>56946306
I think "better" is a pretty nebulous term. Everyone's needs are different, so what's better for me might not be better for you. My ETF holdings in my brokerage account are about 50% SCHD and 50% DGRO, and my ETF holdings comprise about 80% of the brokerage account.

If you think SCHD is the best ETF for your needs, then don't let some neckbeard on a Rhodesian seashell trading forum deter you.

>>56947416
VIG is has a 0.5% higher dividend than VOO. Yeah, it's significant but both of them have a dividend less than 2%. So if you're someone looking for yield, something like SCHD or VYM is probably a better choice.

>>56948092
>So if you're someone looking for yield, something like SCHD or VYM is probably a better choice.
Could be. Depends on your exact needs and resources.

My comments are primarily in response to the anon considering SCHD a way to avoid owning bad companies like T. Since it contains VZ, a very similar peer of T, as its top holding I figured he might want to know if his mission is to dodge owning bad stocks.

I offered VIG as an alternative only because I was asked for an ETF that might compare favorably to SCHD. I chose it because, in light of the original complaint, it has what I consider to be higher quality companies in its core holdings.

Anyone else buying covered calls? Been throwing all I can into QYLD which might not be the smartest but it would be nice to be able pay my mortgage with it one day, then throwing spare into grow stocks

Thoughts on
VIG
DJIA
SCHX
DGRO
JEPQ
DIVO
SPYI
JEPI

to be honest i just googled divident etfs recommendation like 2 months ago and just blindly invest in them.

>>56948754
>>56948826
covered call funds are not dividend stocks and i'm sick of pretending otherwise

>>56948754
I don’t really like CC ETFs personally. Only because they are relatively new and it’s unclear how they will perform in different market conditions. I do like to sell very conservative covered calls to squeeze an extra % of yield out over the course of a year.

Current portfolio. Thinking about buying into RTX, swapping the AMD with INTC, and buying a couple shares of XOM. I posted in the last general, I’m still new to this… what’s the deal with AMT? Is it any good?

>>56949046
Why RTX and AMD->INTC?

>>56949046
I like your pics. I want to get into CAT eventually. That’s one company that will always be relevant and they have an incredible history of dividend raises.

>>56948754
Not a fan of the capital erosion you see in a lot of the yieldmax funds. And I don't need the income right now so why put myself in a more tax disadvantaged position?

>>56948826
>blindly investing in a Google result
Buffet-tier strategy.

In all honestly, a bunch of etfs is probably the safest route you can go if you're not going to do any research.

>>56948889
B-but they say "dividend" in seeking alpha!

>>56949183
RTX will always have steady business and will never go away. Unless America implodes, but if that happens I have more things to worry about than stocks. And Intel because of the dividend and I think they’ll be able to catch up with AMD and nvidia when they finish their mega plants

>>56949661
If lasers ever get good enough to replace SAMs they are in trouble

FUCK DIVIDENDS

I'M ALL IN UPRO AND XXXX NO DIVIDENDS HIGHEST RETURNS

WOOOO YEAHHHHH

Enjoy retiring in 40 years when you have 3 years left to live. I'll be making it in the next 5. While you will have a dick that no longer works with a fat wife (boomer style) I'll be banging SEA hotties on their birthday the day they reach age of consent. But have fun living the boomer lifestyle your parents went for because you aren't will to take a risk.

>>56946305
This. This thread should be more about companies mature enough to pay dividends, rather than the dividends themselves.

>>56951044
Why don’t you post about some quality companies