Author Topic: Anyone Else Only Buying Dividend Stocks?  (Read 71613 times)

brooklynguy

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #200 on: June 02, 2015, 06:58:51 AM »
Sorry, I failed to mention my implicit investing assumptions along with that quote. Here it is more completely:

 - if you don't have any trust in your ability to know when a company is overvalued or undervalued (i.e., you aren't a stock-picker, which describes most people on this forum), then you shouldn't have any preference for how companies choose to return value to shareholders.
- if you're a stock-picker, then you absolutely should have a preference for how companies choose to return value to shareholders.

Those are two opposing positions, and this is a case where there is no logical middle ground between the two. You either believe you can't do any better than the company management at making capital decisions, or you believe that you can. The logical consequence of the former position is to just take what the companies (and the index) give you. The logical consequence of the latter position is to actively get out of a position whenever you think management is making bad decisions. Both defensible approaches.

Here's a logically defensible middle ground:  managers are uniquely bad at the specific capital allocation decision of conducting share buybacks.  Incentives exist for managers to conduct share buybacks (including the immediate boost to earnings per share) that do not equally apply to other methods of allocating capital, such as paying dividends or making reinvestments in the business.  As beltim is fond of pointing out, the data shows (show? -- I know "data" is plural, but grammatically treating it that way offends my unenlightened ears) that corporate managers are generally pretty awful at timing the market through share buyback programs, which leads to destruction of shareholder value.  It is true that a dividend would have the same effect on any shareholders who choose to reinvest the dividend in additional shares, but share buybacks are not necessarily conducted in lieu of a dividend -- it is not necessarily the case that management first decides to return capital to shareholders, then decides which method (buyback vs. dividend) to use do it.  Instead, management may decide to conduct a share buyback (say, for the short-term (immediate, really) effect of increasing EPS, even at the expense of maximizing long-term shareholder value), when the alternative capital allocation strategy in their mind is not paying a dividend but reinvesting the cash in the business or even simply sitting on it.  I'm not saying I necessarily believe that any of this is pervasively true such that I express a preference against buybacks, but it is a logically coherent reason that someone may do so even if they generally believe that corporate managers are better capital allocators than themselves.

forummm

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #201 on: June 02, 2015, 07:24:22 AM »
But if managers are buying back shares at high values instead of paying out dividends, isn't that the same thing as them paying out dividends and you reinvesting them at high values?

forummm

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #202 on: June 02, 2015, 07:26:37 AM »
You said it does not make any sense to own a company if you want a dividend from them as it implies you agree with management all but 4 days a year.

Ah. No, I only said that if you're in the class that disagrees with management's capital allocation decisions it doesn't make sense to only want a dividend. You should divest yourself to a greater extent than the dividend. If you're in the other class (the one that trusts management) then it makes perfect sense to be happy with a dividend, because you trust that that was the best possible use of capital.

To be clear, I'm not anti-dividend. I'm simply against a focus on dividends when deciding on what to invest in. So I largely agree with the rest of your post; if a company has no better use for its cash than to pay a dividend, of course that's what it should do (well, actually I think it should execute a disciplined buyback schedule instead, as that returns the same value to shareholders but gives them tax flexibility).

FYI, Buffett seems to be in the same "trusts whatever management gives him" class that me and all other broad-market index investors are in. From his 2014 Letter:

"If Berkshire’s yearend holdings are used as the marker, our portion of the “Big Four’s” [American Express, Coca-Cola, IBM and Wells Fargo] 2014 earnings before discontinued operations amounted to $4.7 billion.... In the earnings we report to you, however, we include only the dividends we receive – about $1.6 billion last year.... But make no mistake: The $3.1 billion of these companies’ earnings we don’t report are every bit as valuable to us as the portion Berkshire records.

The earnings these investees retain are often used for repurchases of their own stock – a move that enhances Berkshire’s share of future earnings without requiring us to lay out a dime. Their retained earnings also fund business opportunities that usually turn out to be advantageous.
All that leads us to expect that the per-share earnings of these four investees, in aggregate, will grow substantially over time (though 2015 will be a tough year for the group, in part because of the strong dollar). If the expected gains materialize, dividends to Berkshire will increase and, even more important, so will our unrealized capital gains."
(emphasis added)

So he actually likes capital gains more than dividends in this case (maybe as he's run out of opportunities to direct cashflow towards?) And I'm pretty sure that unlike amateur-dividend-investors, he doesn't hold any of this paradoxical mistrust-of-management in the companies he owns. Sure, sharing some of their earnings with him and allowing him to reinvest it elsewhere has been a key part of the success of BH, but I'm sure he trusts his business managers to know when to reinvest in their own businesses vs. return the cash to him; I don't think he demands a 100% (or any other) payout ratio.

Capital gains don't have taxes in the short term. And if you *never* sell, you never have to pay in the long term either. Buffett hasn't bought or sold Coke in like 20 years. He may never sell it. If you hand the shares to your kids upon death, you handed them a lifetime of tax-free gains.

brooklynguy

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #203 on: June 02, 2015, 07:35:00 AM »
But if managers are buying back shares at high values instead of paying out dividends, isn't that the same thing as them paying out dividends and you reinvesting them at high values?

Yes, it is the same thing from the perspective of the reinvesting shareholders, which is what I said here:

It is true that a dividend would have the same effect on any shareholders who choose to reinvest the dividend in additional shares

But the point I went on to make is that a dividend payment is not the logically necessary alternative to a share buybacks.  Management could instead decide to let the company continue to sit on the cash, or reinvest it into the business (e.g., build a new factory).  Because share buybacks potentially have perverse incentives for management that those other alternatives do not, it would not necessarily be illogical for someone to take the position that they prefer for companies not to return capital to shareholders via stock buybacks, even if that person otherwise adopts an indexer-like "complete trust in management" approach.

skyrefuge

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #204 on: June 02, 2015, 01:51:13 PM »
Where did I say I miatrust management and that I want a 100% payout ratio? You seem to be taking my posts to their logical extremes. I'm not really sure why.

You said "IMO the better option is to take the dividend and choose how to allocate the capital instead of letting others choose for you." Yes, you didn't say anything about a 100% payout ratio; that was more me asking a Socratic question: if you can allocate capital better than management, why would you not demand a 100% payout ratio (or sell all your shares)? Again, there's a logical conflict between you wanting to choose how to allocate the capital, but allowing the company decide the time and the amount for you to reallocate.

For example, Disney just paid a dividend in January. Great, company, has had a great run, was at an all time high then. They could have just done a buyback, but instead I got cash from them and was able to use that cash to purchase more shares of Gilead, which was trading at an extreme discount at the time. I want to own more Disney, but not at $110.

Perfect, this makes it easy to make my logical-extremism more tangible by using a concrete example. You believed at the time of the dividend that Gilead was a better value than Disney. So you reallocated some capital from Disney to Gilead. That makes perfect sense.

What's odd is that the amount you decided to reallocate was 1.25% of your holding in Disney. If you thought Gilead was a better value then Disney, why did you not reallocate 100% of your holding in Disney to Gilead? Or, if you were less-confident in your valuation estimates and wanted to hedge your bets, why not 10%? Or 1.35%? Or 0.25%? It seems like an incredible coincidence that the amount that you thought was correct to reallocate just happened to be the amount that Disney decided to pay out in a dividend.

Of course, it wasn't a coincidence. You decided your reallocation amount and timing based on the decision of Disney's management to pay a dividend.

This is the logical conflict I'm trying to highlight. If you trust company management to correctly know the amount of capital that you should reallocate elsewhere, then why would you stop trusting them when that amount just happens to be 0?

If we make the opposite assumption, and you don't trust company management to correctly know the amount of capital that you should reallocate elsewhere, then you always have the ability to perform these reallocations whenever you'd like (by selling the amount of shares you deem appropriate). A dividend is not necessary for you to perform reallocation.

In either case, the payment of a dividend (or lack thereof) should not matter to you.

Buffett's case is different. He likes to own entire companies. In that case, he cannot perform capital reallocation by selling portions of those companies and investing the money elsewhere (at least not easily). So dividends are the only way for him to get access the capital in those companies. Thus, his preference for dividends in the companies he wholly-owns is logical. Until you get to the point where you're buying entire companies, you are not shackled with that "limitation" and have far more flexibility in reallocation because you can just sell some shares.

(And for the companies he only owns portions of, they tend to be dividend payers just because the types of companies Buffett knows how to value happen to be the types of companies that pay dividends; after all, 84% of S&P500 companies pay dividends; it's not an unusual class of stock! His quotes I pasted show that their dividends are just a side-effect, not the reason he bought them.)

They could have just done a buyback, but instead I got cash from them

No, not "could have". Disney was doing a buyback, in addition to paying a dividend, and doing capital reinvestments (it seems like most companies do some mix of at least those three these days). In fact, the amount returned to shareholders via buybacks exceeded the amount returned via dividends by 2.6x. If you believed Gilead was a better value than Disney, why did you not at least sell a percentage of your shares equivalent to the buyback amount, in addition to taking the dividend? That still wouldn't be terribly logical, but at least it would be taking the entire portion of the money Disney knew no better use for, rather than only the fraction it returned in the form of a dividend.

Again, this is all to point out the logical inconsistencies that come from occupying the middle ground. If you're better at capital allocation than company management, then it makes no sense to let their dividend payments be the driver of your reallocations. Get your own ass in the driver's seat! And conversely, if you think you're no better at capital allocation than company management, then it makes no sense to favor any particular dividend payout amount over any other (including 0).

beltim

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #205 on: June 02, 2015, 02:17:52 PM »
Where did I say I miatrust management and that I want a 100% payout ratio? You seem to be taking my posts to their logical extremes. I'm not really sure why.

You said "IMO the better option is to take the dividend and choose how to allocate the capital instead of letting others choose for you." Yes, you didn't say anything about a 100% payout ratio; that was more me asking a Socratic question: if you can allocate capital better than management, why would you not demand a 100% payout ratio (or sell all your shares)? Again, there's a logical conflict between you wanting to choose how to allocate the capital, but allowing the company decide the time and the amount for you to reallocate.

Companies are good are investing to expand their business, on average.  Companies are bad at reinvesting in their stock, on average.


Quote
If we make the opposite assumption, and you don't trust company management to correctly know the amount of capital that you should reallocate elsewhere, then you always have the ability to perform these reallocations whenever you'd like (by selling the amount of shares you deem appropriate). A dividend is not necessary for you to perform reallocation.

Investors don't have the ability to invest in a company's new project - management does.  I'm happy to let management decide whether they need funds to reinvest in their business - but unless they've shown better than average market timing, they shouldn't be in the business of doing buybacks.  Because, like most mutual funds managers and individual investors, their stock investments don't beat the market.


mizzourah2006

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #206 on: June 02, 2015, 02:51:38 PM »
Where did I say I miatrust management and that I want a 100% payout ratio? You seem to be taking my posts to their logical extremes. I'm not really sure why.

You said "IMO the better option is to take the dividend and choose how to allocate the capital instead of letting others choose for you." Yes, you didn't say anything about a 100% payout ratio; that was more me asking a Socratic question: if you can allocate capital better than management, why would you not demand a 100% payout ratio (or sell all your shares)? Again, there's a logical conflict between you wanting to choose how to allocate the capital, but allowing the company decide the time and the amount for you to reallocate.

For example, Disney just paid a dividend in January. Great, company, has had a great run, was at an all time high then. They could have just done a buyback, but instead I got cash from them and was able to use that cash to purchase more shares of Gilead, which was trading at an extreme discount at the time. I want to own more Disney, but not at $110.

Perfect, this makes it easy to make my logical-extremism more tangible by using a concrete example. You believed at the time of the dividend that Gilead was a better value than Disney. So you reallocated some capital from Disney to Gilead. That makes perfect sense.

What's odd is that the amount you decided to reallocate was 1.25% of your holding in Disney. If you thought Gilead was a better value then Disney, why did you not reallocate 100% of your holding in Disney to Gilead? Or, if you were less-confident in your valuation estimates and wanted to hedge your bets, why not 10%? Or 1.35%? Or 0.25%? It seems like an incredible coincidence that the amount that you thought was correct to reallocate just happened to be the amount that Disney decided to pay out in a dividend.

Of course, it wasn't a coincidence. You decided your reallocation amount and timing based on the decision of Disney's management to pay a dividend.

This is the logical conflict I'm trying to highlight. If you trust company management to correctly know the amount of capital that you should reallocate elsewhere, then why would you stop trusting them when that amount just happens to be 0?

If we make the opposite assumption, and you don't trust company management to correctly know the amount of capital that you should reallocate elsewhere, then you always have the ability to perform these reallocations whenever you'd like (by selling the amount of shares you deem appropriate). A dividend is not necessary for you to perform reallocation.

In either case, the payment of a dividend (or lack thereof) should not matter to you.

Buffett's case is different. He likes to own entire companies. In that case, he cannot perform capital reallocation by selling portions of those companies and investing the money elsewhere (at least not easily). So dividends are the only way for him to get access the capital in those companies. Thus, his preference for dividends in the companies he wholly-owns is logical. Until you get to the point where you're buying entire companies, you are not shackled with that "limitation" and have far more flexibility in reallocation because you can just sell some shares.

(And for the companies he only owns portions of, they tend to be dividend payers just because the types of companies Buffett knows how to value happen to be the types of companies that pay dividends; after all, 84% of S&P500 companies pay dividends; it's not an unusual class of stock! His quotes I pasted show that their dividends are just a side-effect, not the reason he bought them.)

They could have just done a buyback, but instead I got cash from them

No, not "could have". Disney was doing a buyback, in addition to paying a dividend, and doing capital reinvestments (it seems like most companies do some mix of at least those three these days). In fact, the amount returned to shareholders via buybacks exceeded the amount returned via dividends by 2.6x. If you believed Gilead was a better value than Disney, why did you not at least sell a percentage of your shares equivalent to the buyback amount, in addition to taking the dividend? That still wouldn't be terribly logical, but at least it would be taking the entire portion of the money Disney knew no better use for, rather than only the fraction it returned in the form of a dividend.

Again, this is all to point out the logical inconsistencies that come from occupying the middle ground. If you're better at capital allocation than company management, then it makes no sense to let their dividend payments be the driver of your reallocations. Get your own ass in the driver's seat! And conversely, if you think you're no better at capital allocation than company management, then it makes no sense to favor any particular dividend payout amount over any other (including 0).


So diversification is only important in index investing? I did allocate a hell of a lot more capital to Gilead at that point in time and since then have made almost 30% compared to the markets 3% return, but I also believe in diversification. Apparently, you are advocating for the idea of "if you think another company is a better investment liquidate all other holdings and invest in them".

Your example only makes sense if I don't care about diversification.

Do you not believe there is a time when a company can no longer efficiently allocate capital back within their org? Or do you believe companies can organically or through M&A grow forever at competitive top and bottoms lines? Another positive about dividends is I don't have to incur a transaction fee on the way out. If I did what you say I would pay a $7.99 transaction fee to sell Disney and a $7.99 transaction fee to buy Gilead. With a dividend I split that fee in half.

You still haven't addressed the fact that Berkshire uses a very similar investment strategy (I.e. Owning high quality companies forever and taking the cash flow they generate to buy other attractively priced assets.)

But... I totally agree, all companies should just cease dividends and only do share buybacks. its not remotely possible that buybacks may have some conflict of interest because unvested shares and unvested options are impacted where as a dividend has no impact on those same shares. I work for a company and receive 10% of my salary in unvested stock every year, I love buybacks, because I wouldn't receive a dividend, but I get to reap the benefits of reduced float that comes with share buybacks, regardless of the price they are made at. Also, management of companies operate in a vacuum, you don't. For example, right now healthcare is expensive, but JNJ is relatively inexpensive compared to BMY, so JNJ may think it is an attractive price to buyback tons of shares. Yet over in financials, WFC is dirt cheap compared to JNJ and as the fed raises interest rates money will begin to flow back into financials. JNJ management is not looking at stock buybacks vs all other possible purchases in the spectrum of the investment world, they are comparing themselves to their peers.

skyrefuge

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #207 on: June 02, 2015, 05:08:07 PM »
Apparently, you are advocating for the idea of "if you think another company is a better investment liquidate all other holdings and invest in them".

Your example only makes sense if I don't care about diversification.

Hmm, have you only been reading random lines from my posts, and ignoring the rest? Yes, I raised the suggested the possibility of divesting yourself 100% from an overvalued company. But I immediately followed that with: "Or, if you were less-confident in your valuation estimates and wanted to hedge your bets, why not 10%? Or 1.35%? Or 0.25%?" My point was not to say "you should divest yourself 100%", it was to ask "of the infinite number of levels at which you could divest yourself, why did you choose the one that matched the amount the company decided?"

Do you not believe there is a time when a company can no longer efficiently allocate capital back within their org? Or do you believe companies can organically or through M&A grow forever at competitive top and bottoms lines?

"if a company has no better use for its cash than to pay a dividend, of course that's what it should do". I wrote that just two responses ago.

Another positive about dividends is I don't have to incur a transaction fee on the way out. If I did what you say I would pay a $7.99 transaction fee to sell Disney and a $7.99 transaction fee to buy Gilead. With a dividend I split that fee in half.

Good point. I agree that transactions fees are a logical reason to choose a somewhat different reallocation amount/timing than your valuation model would optimally suggest in a world without such fees. Have you done any analysis to create a rule-of-thumb for how far out-of-whack your allocation has to be to overcome the drag of transaction fees? For example, if your model tells you that you should divest yourself of 1.5% of your stake in Disney, and they happen to pay a 1.25% dividend, then it's unlikely that paying a fee to sell that extra 0.25% would be worth it. And if your model says you should divest yourself of 50%, then the fee to sell the extra 48.5% is probably worth it. But what if you're 10% off? Or 5%?

You still haven't addressed the fact that Berkshire uses a very similar investment strategy (I.e. Owning high quality companies forever and taking the cash flow they generate to buy other attractively priced assets.)

I think I've addressed BH quite a bit. But, ok. Yes, that is the strategy BH uses. That is also the strategy a dividend-agnostic, dividend-reinvesting index investor uses. It is a good strategy! I highly recommend it!

But... I totally agree, all companies should just cease dividends and only do share buybacks.

I should have kept my damn fool mouth shut and not let the word "buybacks" escape my lips. Because I think it's an unnecessary distraction from the discussion at hand. Everything I've said in our discussion still applies even if "buybacks" are not a legal option for companies, and the choice is only between dividends vs. retaining/reinvesting/debt-paydown. The logical passive investor just takes whatever dividends companies decide to give him, and reinvests them. The logical active investor either reinvests dividends in the same company if he feels the company is returning too much cash to him, or creates his own dividend by selling shares if he feels the company is returning too little cash to him, or does not own that company at all if he thinks their management regularly makes the wrong decisions. Neither selects or avoids companies to invest in based on their dividend payments.

(for the record, when I expressed a slight preference for buybacks in place of dividends, I said "I think [a company] should execute a disciplined buyback schedule", where the phrase "disciplined buyback schedule" was meant to convey "a buyback-program that even a buyback-hating dividend-lover wouldn't bitch about", e.g., one performed with the same amount of cash and with the same timing of your ideal dividend schedule, avoiding any of the potentially ulterior motives that are attributed to buybacks.)

Ricky

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #208 on: June 02, 2015, 07:13:19 PM »
I don't understand the need to argue about it. Maybe index funds will outperform dividend "giants" as a whole over time, maybe they won't. Either way, if you're more comfortable with one than the other, what's the point in doing something your uncomfortable with? Both are investing, which is better than not investing. Whether you buy mostly dividend paying stocks or broad-market funds is still better than what the mass majority would do with their money.

Buying Starbucks only once a week, reverting to basic cable, and buying a new Camry vs. a new F-150 are also "better than what the mass majority would do with their money", but that's a damn low standard for Mustachians.

Yes, I completely agree that a dividend-focused approach (if diversified and reasonably passive) is not likely to greatly underperform a dividend-agnostic approach, and may even outperform it. But as I've said before, generally the pursuit of a dividend-focused strategy is an indication that an investor has only a first-order understanding of dividends and stock markets, and I figure a clearer understanding (such as the basic fact that a dividend payment reduces the share price) will be beneficial to their investment success in the long run. So I tend to encourage people to ignore dividends.

A whole culture of dividend-focused investing has grown out of such misunderstandings, and it perpetuates those misunderstandings, so I think it's reasonable for any of us to do whatever we can to counterbalance that culture rather than just saying "eh, believe whatever you want".

While I see a distinction between knowing that dividends aren't the only form of capital allocation done by companies, and treating dividends as if they're the only viable form of income, it doesn't make a practical difference. Again, if dividends are easier to understand by some and that's how they are comfortable investing, and that they'll likely come out fine in the long run, what's the reason for needlessly pointing the distinction between "dividend" investing and "regular" investing? They're still going to see it how they want to see it, misconceptions abound or not. Theoretically, yes, the share price goes down by the amount of the dividend, but not always. Just like stock prices aren't always necessarily directly correlated to the underlying company.

YoungInvestor

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #209 on: June 02, 2015, 08:08:50 PM »
Dividends aren't do-or-die for me, but I like to evaluate a stock as the NPV of its future dividends. If I can calculate an IRR > 8% assuming a conservative growth of the dividend and 10% based on my best estimate, I'll just take the potential capital gains as icing on the cake.

waltworks

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #210 on: June 02, 2015, 09:18:46 PM »
I think the problem, really, is that a lot of dividend focused people end up buying individual stocks, and having problems with diversification and/or asset allocation, not to mention doing a bad job with tax optimization. And they end up spending a lot of time on their investments and tracking things, for negligible benefit.

If you are sophisticated enough to handle those things, and want to spend the time, there's probably nothing wrong with it.

-W

Financial.Velociraptor

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #211 on: June 02, 2015, 09:23:34 PM »
I was just noticing the topic is about ONLY divs.  I posted somewhere earlier on this thread and didn't grok that.  I have dividend leanings but have 4 issues in portfolio with no dividends.  I consider all the components of shareholder yield: debt repayment, dividends, and share buybacks.  I am also very high on insurers with a history of strong underwriting so I sometimes pick stocks with no dividend yield.

Put yield is more important to me than any of the above though.

mrpercentage

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #212 on: June 03, 2015, 01:07:45 PM »
People often overlook dividend advantages over capital gains as they are taxed more favorably which works out very well for many over capital gains non dividend stocks. Everybody situation and goals are different. For many they choose a side and bash the other side like republican/democrats, pc/mac . People have to stop being elitist dicks and embrace all sides to investing. What works for you may not work for others so chill out people.

I am invested in dividend stocks primarily but I am not opposed to
index investing
Reits
preferred stock
bonds

I am just not a dick about it and bash other forms of investments. There is enough room for all investors to make money.

I think if you make money you won. I'm often told that I could do better with (add whatever). My first thought is if this turns into a dick measuring contest there will always be a freak out there with a bigger one, a faster car, a meaner portfolio. So I agree with you. If it makes you happy and works for you great. I like stocks and shopping for them. It's psychologically different then auto investing and receiving a smaller take home paycheck. It just so happens that this monkeys darts seem to be hitting damn good companies too. I'm still doubling the 500

UKFreak

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #213 on: March 26, 2016, 05:05:58 AM »
I agree 100%. I also used to buy stocks and mutual funds and then keep my fingers crossed that I could make money on the price. When the market was up, I was happy, when it was down my mood went with it. I was a slave to the market movements.

Today I only invest in companies that pay dividends, and have done so for decades. Instead on focusing on the prices of the stock, I focus on the dividend, and whether or not it is being raised. By investing in these companies, even if they have a small yield, the compunding effect of the increasing dividend will give me a nice passive growing income, without being held captive by market movements. It seems that companies that have raised their dividends for decades, are much more likely to keep raising them in the future as well. For instance, if you are the CEO of Coca Cola, who has raised their dividends for 53 years, would you be the one to cut the dividend? I think not :-(

For instance, see which Canadian companies have raised their dividends for the longest:
https://dividendplanet.com/best-canadian-dividend-stocks

Or see the corresponding list for British stocks:
https://dividendplanet.com/best-uk-dividend-stocks

Happy dividend hunting!

nobodyspecial

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #214 on: March 26, 2016, 11:27:13 AM »
For instance, if you are the CEO of Coca Cola, who has raised their dividends for 53 years, would you be the one to cut the dividend? I think not :-(
Similarly you could be the CEO of a telco who blindly raised dividends instead of investing in this new internet and mobile stuff.
 
Dividend companies are still subject to the market but have limited themselves to one way of using their resources - paying dividends. Which means that if you are eg. an oil company at the moment, you cut exploration, cut research, cut operations and pay a dividend even when you are losing money - because to be the first to cut it would send the wrong message. The couple of Canadian oil sands operators that have cut or eliminated the dividend have seen their share price rise while the others have seen it drop. There is no point in owning a stock which will pay a 2% dividend into bankruptcy.

 

tyir

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #215 on: March 26, 2016, 11:38:33 AM »


For instance, see which Canadian companies have raised their dividends for the longest:
https://dividendplanet.com/best-canadian-dividend-stocks

Or see the corresponding list for British stocks:
https://dividendplanet.com/best-uk-dividend-stocks


One issue with this mentality is you're buying the stocks that have done well in the past X years - there's no guarantee they are the ones that will do well in the next Y years. To me this is similar to "here are the active mutual funds who have done the best in the last 10 years". This argument has been done ad nauseum on this forum, though.


Interest Compound

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #216 on: March 26, 2016, 12:26:38 PM »
It seems that companies that have raised their dividends for decades, are much more likely to keep raising them in the future as well.

Besides the obvious attempt to spam the forum with your own links by digging up old threads on dividend investing and linking multiple times to your own website as your first-and-only-post to the forum...do you have any outside sources for this claim?

YoungInvestor

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #217 on: March 26, 2016, 01:06:49 PM »
I consider myself a value investor. I am fairly agnostic to dividends, but pay attention to a company's strategy when it comes to returning capital. Does the company buy back overvalued stock? Does it just let cash pile up? How is the debt level? If the company can achieve high ROE, let them have it. For industries with slow growth, I want my cash.

I'm agnostic, yes, but only so long as the rationale behind decisions makes sense.

Re: tax treatments. Capital gains don't need to be triggered for you to cash out capital gains. You could just take out a margin loan (tax-deductible interest in the US, I assume) and receive a very favorable tax treatment, in which your heirs could sell stock at its stepped up basis to cover the loan.

capitalninja

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #218 on: March 26, 2016, 03:27:46 PM »
I only by stocks and/or ETFs that pay a dividend. If there's no dividend then all you have is an infertile golden goose. The only way to get any benefit is to kill the goose (i.e. sell the security).

IMO buying a security that doesn't pay a dividend falls squarely into the speculation column because you only win if the price goes up. That's a bad way to make money longterm.

nobodyspecial

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Re: Anyone Else Only Buying Dividend Stocks?
« Reply #219 on: March 26, 2016, 09:24:53 PM »
While companies paying dividends are saying that they can't make any investment or grow. They are OK as long as nothing changes.

A lot of canal companies paid handsome dividends, as did companies spending $60/bbl to extract oil sands.