Dividend-investing pros, cons, questions

[MStangRacer]

Dividends - They tell you nothing about a company's earnings, profitability or total return.

This was said a few times in the thread, but no one said to only value a stock by the dividend

[effigy98]

I plan on living off one of my portfolios using mostly SCHD, DGRO, and VIGI. It does a quality screen and dividends are pretty tax efficient in RE. The psychological benefit and ease of receiving a steady check in the mail is going to be nice.

Dividends are for the patient and wealthy. I can see where all this backlash comes from because people do not want to have to save that much to live off dividends so you are asking them to work a few more years or make more money.

[Scandium]

I plan on living off one of my portfolios using mostly SCHD, DGRO, and VIGI. It does a quality screen and dividends are pretty tax efficient in RE. The psychological benefit and ease of receiving a steady check in the mail is going to be nice.

Dividends are for the patient and wealthy. I can see where all this backlash comes from because people do not want to have to save that much to live off dividends so you are asking them to work a few more years or make more money.

I see this used, but is this just a phrase? Or does someone still actually get a check in the mail with dividends? Lol, do they even do that anymore?

And no, you don't actually see where "all this backlash comes from". It's not because we're not "patient". It's that facts and data simply don't back up that they are steady, reliable, or in any way different from selling shares. As discussed many-many times here before! THAT'S why.

[beee]

There's a new video from Ben Felix:
The Irrelevance of Dividends
https://www.youtube.com/watch?v=f5j9v9dfinQ

This one was already posted here but the link was broken, so reposting:
Dividend Growth Investing
https://www.youtube.com/watch?v=UpXI_Vd51dA

[effigy98]

I see this used, but is this just a phrase? Or does someone still actually get a check in the mail with dividends? Lol, do they even do that anymore?

OK direct deposit...

Dividends do not matter much math wise, but psychologically they can. My wife knows nothing about investing. When I die, I will like knowing that she will not have to deal with the market right away and can keep receiving those DEPOSITS into the bitcoin account (or whatever you kids use now).

[Andy R]

Dividends do not matter much math wise, but psychologically they can.

When dividend investors have exhausted every other attempt at defending dividend investing, their final argument is that focusing on dividends offers a behavioural benefit that allows you to remain invested during market turbulence, therefore it still has value.

The problem with feeling good at the expense of facing reality is that one day there may be a sustained market decline and a long drawn out recovery and you will find that dividend focused shares are not a bond proxy.

This article on what a bear market feels like, points out that
" In the last crisis in the US the major banks weren’t allowed to pay out dividends for quite some time. "

This should give you some pause to consider the danger of assuming historically strong dividend payers are a bond proxy that will provide you with safe income during a down turn.

Deluding yourself into believing dividend stocks are safe is not a benefit, it's a downside.

[Buffaloski Boris]

Dividends do not matter much math wise, but psychologically they can.

When dividend investors have exhausted every other attempt at defending dividend investing, their final argument is that focusing on dividends offers a behavioural benefit that allows you to remain invested during market turbulence, therefore it still has value.

The problem with feeling good at the expense of facing reality is that one day there may be a sustained market decline and a long drawn out recovery and you will find that dividend focused shares are not a bond proxy.

This article on what a bear market feels like, points out that
" In the last crisis in the US the major banks weren’t allowed to pay out dividends for quite some time. "

This should give you some pause to consider the danger of assuming historically strong dividend payers are a bond proxy that will provide you with safe income during a down turn.

Deluding yourself into believing dividend stocks are safe is not a benefit, it's a downside.

I’m on the value end of things and generally speaking am dividend agnostic. I do expect a company in a mature industry to pay them, but how they pay and how they marry that with stock buybacks is really a personal preference issue.

I am becoming more of a fan of dividends over time. There is a certain amount of hubris in a company deciding they’re going to retain earnings for stock buybacks, which seem to be made during bull markets, as well as retaining earnings for mediocre investment prospects. Hand the money back to the stockholders and let them decide what to do with it.

Investors who prefer dividends are not delusional. They’re acting on a preference.  While I think it obvious that dividends will decline during a recession, we do have historical information regarding the magnitude that a prudent investor can use to estimate how much of an individual stock or fund they’ll need to own to get their desired dividends.

[Telecaster]

I am becoming more of a fan of dividends over time. There is a certain amount of hubris in a company deciding they’re going to retain earnings for stock buybacks, which seem to be made during bull markets, as well as retaining earnings for mediocre investment prospects. Hand the money back to the stockholders and let them decide what to do with it.

I'm becoming less of a fan of dividends over time.  If a company reinvesting in itself means mediocre prospects, then why would I want to invest in the company in the first place? 

[Buffaloski Boris]

I am becoming more of a fan of dividends over time. There is a certain amount of hubris in a company deciding they’re going to retain earnings for stock buybacks, which seem to be made during bull markets, as well as retaining earnings for mediocre investment prospects. Hand the money back to the stockholders and let them decide what to do with it.

I'm becoming less of a fan of dividends over time.  If a company reinvesting in itself means mediocre prospects, then why would I want to invest in the company in the first place?

You probably wouldn’t. Nor would I.

A company with a mature market and good profitability would do better to pay a dividend. Instead they tend to buy back shares. I think that’s less optimal as stock buybacks tend to be made during good times when shares are generally expensive. ( I realize there is a tax benefit to share buybacks.)

[mikescepaniak]

For any interested parties who are coming across this thread after the fact, I don't have a recording of the presentation to share, and the slides aren't very useful by themselves. However, I have written an article that expands on the subject matter. You may find a link to it in the first/originating post of the thread. Thanks.