If the funding source of the dividend is not coming out of cash flow produced by operations, then it might be better to NOT receive a dividend. Some companies will resort to tomfoolery in their accounting just to deliver a “dividend” to shareholders. It masks poor performance and can hurt you later on down the line. A legitimate dividend? Bring ‘em on! We love them.
@D Mack but that is pretty tough if you are self-employed. How do you even place independent stocks in a retirement account. I thought you had to buy a bundle of stocks (sort of like an ETF) when creating your retirement account(s)?
So sell mcdonalds and Coca Cola right now? Maybe you should rather look out for What made them pay dividend out of them borrow money to pay dividends. Coca Cola and MCD for example repurchased tons of shares so they did not have enough cash flow to pay dividends. Yet they still did since they are dividend aristocrats
A falling share price is not necessarily indicative that the company is in trouble. Mr. Market is known to be irrational as pointed out by Benjamin Graham and a falling share price may be a chance to buy a great dividend stock at a discount. For dividend safety, it's important to see if it's sustainable by looking at the payout ratio from earnings, cashflow, etc depending on the company. A low payout ratio indicates room for the dividend to grow as well as making it more likely that the company can continue to pay a dividend.
Trouble is, markets are rarely too irrational. Markets, for the vast majority of cases are efficient. Falling share prices are indicative of a company that is failing.
@@MrMineHeads. I would disagree. I mean, I would probably grant that they're long term efficient, but the frequency of irrational trader behavior is far too high for me to ever agree that markets are truly fundamentally efficient. It's a good enough approximation if you're diversified and long, but anyone putting down all their money on GME at highs during the Gamestop nonsense under the assumption that the market had efficiently determined an appropriate price would have been an idiot. That kind of activity pops up over and over and over again. Even at the level of market risk, we call them bubbles in that scenario. And popped bubbles don't mean a company is necessarily failing.
One thing to watch out for which the video briefly touches upon is the taxation. Unqualified dividends in the US are taxed as income, so while you may end up reinvesting the dividend in more stocks, to the IRS, you've been "paid" so you'll owe taxes on that dividend. This may mean a bigger tax bill at the end of the year and depending on your tax bracket, might be something to take into account (vs a capital gains tax which you can control by controlling when you sell the stock).
I live in the USA. Dividends are tax free when you sign up for DRIP. If you just take the dividends they are taxed at 15.1% on the 1099-div IRS form. @@louisphily1
My friend was telling me the wonders of a high dividend stock . . . in a gold mine. Like, literally, a gold mine. When the mine went dry, it was all gone.
So much knowledge for a French. In France, no one talks about finance nor stocks. It’s incredibly the wealth you can build with finance. That you, English speaking people for sharing your knowledge for free !
This is exactly why it's a good idea to have some portion of cash on the side ready to put into proven sustainable dividend paying companies during a downturn, when they are at a discount. High yields aren't inherently bad, but they aren't the independent variable and you shouldn't be basing your ultimate decision on yield alone
Actually, you’re probably better off doing the reverse. The bounce up is much higher w/ speculative companies. Theoretically, if you thought you could time the market, you’d shift to low beta (blue chips) during the good times to get a relatively mild fall. Then you’d tilt towards speculative stocks for the bounce up. The above said, you should almost certainly NOT try to time the market.
Timing the market is generally a dogshit strategy and you're pretty much always better putting money in every month unless you have perfect market information (you don't)
Excellently explained! I've been researching dividend stocks to invest in and this helped clear up a few deep seated questions I had like the consequences of high pay ratios, dividend cuts, high dividend yields etc. Very helpful
I have been building a dividend portfolio for quite a few years now and am starting to see the compounding, it's great. I make about $1100 a month in dividends which go straight back in to buying more dividend stocks. In Canada there are a lot of great dividend companies to choose from.
@@joshlandon3327 HYLD 13.25% (rn I think?) An etf made up of mostly US stocks, so you get a high yield, low volatility, exposure to the US market on a TSX ticker, and if it's in your TFSA, no tax on those dividends
@@e.d.t432 covered calls are super risky investments. The dividends are paid out from the sale of call options, which is VERY different from a profitable paying out excess cash flow
Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.
@@harrisonjamie794 Very true, If you're looking for help building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.
@@DavidAntony-gq7id How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.
@@harrisonjamie794 KRISTIN GAIL CUNNINGHAM. On the internet, that’s the financial advisor I use. She’s verified; you could also read more about her and then communicate with her. it’s always good to do your research before putting your money into any investment.
Nice video, Richard. My concern with dividend-focused strategies is that they typically end up ignoring parts of the market like small and mid caps. I guess if you can pick the right dividend stocks it might not matter much.
Totally agree, I am actually far from an advocate of dividend-only strategies. The video was more so a commentary on why some people go that route, but as with every strategy there are pros and cons!
Exactly! The real goal is to eventually buy enough to get another share and use anything left to fund a new investment. Currently have 5 drips 2 of the buy multiple shares each month. Just bought 10 shares of Foot Locker on a 20% dip. Any stocks your looking into or that hold a big portion of your portfolio?
I like companies that have the ability to retain and compound earnings at high rates, instead of paying me dividends that get taxed and I have to go to the trouble of finding a new way to invest the money.
Einstein was talking about compound interest in general, the quote doesn't specify money as you indicated. For example, gravity has compound interest effect for mass. The more mass you have, the stronger becomes your gravitational attraction, and so you accumulate more mass per unit of time. Like compound interest, this accelerates your accumulation in a passive fashion.
A Human-Centerd Capitalism to combat Economic Automation. Its about time we ballout the American People. Americans know how to best spend their money. What if, put a $1000 DIVIDEDS a Month in every Americans hands. Democrat, Andrew Yang He Branded " Socialism " PERFECT
BIG thing to consider for dividend stocks is the neat trick you can do within a Roth IRA: While you have to pay tax on dividend reinvestment held in a traditional brokerage (and thus a slight cash-flow consideration), dividends in a Roth IRA are not taxed = MORE SNOWBALL
Nice presentation! As a self employed contractor, I like growth stocks (GS)better than dividends paying stocks because you have to pay tax same year you got dividends (instead of pay tax when you sell growth stocks). I sell stocks to supplement my income. Some year I made almost nothing and another year I got good paid. The ability to spread out the income to reduce some tax is definitely plus for GS
-Albert Einstein 8th wonder in the world is compound interest. We either learn it or ruled by it. or Rule of 72 is good here too. Folks love dividends, passive income for those who like "security".
Bryan Ho that’s basically what investing is though. If I invest $10 and the company grows by $2, I have $12. I’ve just made two dollars. If you invest $10, the company grows by $2, and you get $1 back as dividend which you then reinvest, you are at $12. We are at exactly the same place. This is a gross oversimplification but basically you should be focused on total returns not dividends. Dividends are an important part of any portfolio but to invest exclusively in stocks that pay them is to ignore an important part of the market for what basically amounts to accounting differences.
@@bibo2728 Theoretically it should. Well, kind of. You can also short-term speculate on how others will invest in it, and if you expect stock prices to go up because people have been fooled or fooled themselves, you win. Even if the company won't produce profits.
@@bibo2728 The problem right now is that people don't know a single thing about most of the companies they invested in ... they only follow the herd and pray for a rising price. They don't know about balance sheet or about futur prospect for the company.
@@venictos My favorites are VCIT and PSA. Russian telecom giant MBT is a great, relatively little known among American amateur investors, high div. yield company
Unless it's Frontier Communications (FTR). First stock I ever bought... and possibly the last. It was a telecom stock with a good dividend, and I was interested in their performance because they took over Internet service from Verizon in my region. The transition was rough, but after several months, everything was back to normal. So I figured as people realized their service wasn't that bad after all, they'd stop losing customers, Apparently first impressions count for a lot though, and the company didn't have the best reputation in the pre-fiber days, so people just irrationally hate them now. A lot of former Verizon customers are basically angry that that they got forced into a contract with Frontier against their will that they can't terminate without a fee, and tend to switch out of spite.
6:53 Forced to cut dividend and stock price drops 7:20 Chasing high yields can be a dangerous play When I first started investing in August 2020, I bought high dividend yield stocks. It worked well for 9 months and I collected good cash, but then companies started cutting or eliminating their dividends and stock prices fell and it took about 4 months of moving things around and re-investing to recoup my losses. I later learned that if I had just invested in stuff like Microsoft or Google from the beginning (which pays less than 1% and 0%), my portfolio could've been up a lot more. And just now when I started getting into the "solid" companies like Microsoft and Google, the market decides they're overvalued and hits us with -10% correction.
There are also a ton of problems with this strategy: (1) 60% of us and 40% of intl securities don't pay dividends -- this reduces your portfolio diversity. (2) the dividend payout and earnings growth come out of the same pie -- so if your strategy is to simply reinvest the dividends what did you gain? (3) worse, you're forced to end up paying taxes on the dividends instead of having the advantage of holding and only selling the shares at a time that has a more favorable tax treatment for you
You can always choose companies that both appreciates and gives dividend . A number of things can happen 40-50 years from now. You could be incapacitated by health issues and not be able to sell your CG stocks for income. There could be an event which causes the share prices to crash and you may not get the Capital Gain that you wanted for your immediate expense when liquidating the stocks. Relying on dividends for continuous income stream will help minimize tinkering with your portfolio at the age of 70. Paying more taxes now is not the end of the world and you can always create accounting structures to minimize present tax . I don't see any point in owning stocks that does not provide regular dividends. It would be like buying a rental property and receiving no rental income but waiting on capital growth to for income 20-30 years from the time of purchase. Investing = The productive use of money to obtain regular income. Relying on CG only is speculation.
2023 example of a “dividend trap”: Hawaiian Electric. As of this writing (30 Nov 2023) their profile on various investment sites shows a dividend yield of 12-14%. _However_ , they’re partly responsible for the Maui fires earlier this year, so they face an unknown but probably large liability for damages. This means (1) their share price got smacked down, and (2) they suspended their dividend to free up cash for when that liability comes due. Someone who doesn’t know the context could buy in thinking they’ve found a great income stream, only to learn it’s not coming anytime soon.
The thing about shares, is the risk though. In general they are nice, but for them to have a competitive return, you need to be really into it and active. Otherwise, renting properties may yield more. Ah, but if you know what you are doing and invest in startups in just the right time, then sell again at the right time..!
This comment gave me anxiety lol. No evidence to suggest renting properties gives higher yield than stocks. You’d have to own properties in every country in the world to have the diversification you would need to come close to competing with stocks with just real estate. No one knows enough of what they are doing to invest in start ups at just the right time to consistently make money that way. Those that make money off of start ups consistently are very rich, they have enough capital to get hit with many failures before stumbling on a winner. Basically if you have enough dice to roll, you’ll eventually get a six. That doesn’t work if you have 1 dice to roll. If you only have $100,000 to invest, investing it into 1 extremely risky investment like a start up is almost certainly going to lead to you losing your money. If you have $1 million to invest, you can invest in $1,000 start ups, increasing the probably they you’ll land on a winner. This is how VC companies make money. For the average person this is not a good way to invest money.
I fell into this trap a few years ago. I'm fairly young so I have only been investing since 2019. I was only interested in the dividends of a company and I found a company that was making dividend payments of 14% annually which meant with my 2500$ I was going to be making approximately 1$ per day. This was incredible until the energy sector took a massive hit in 2020. The company cut their dividend to 0% and the price fell from around 20$ to 3.10$ in less than a quarter. It has since rebounded and started paying a 1.6% ish dividend but is now one of the least productive holdings I have.
Don’t jinx it man, we want ppl to stay ignorant, can’t have everyone making smart financial decisions or the smart ppl would make less Broke bitches stay broke and complain, hustlers like us stay educating ourselves and making this money
@@Dankyjrthethird and you suffer from greed, we should wish for better for everyone. The world would make more money together if we could educate people better on things like this. Economic growth> a small percentage of population making alot of money
How to find good dividend stocks? 1. Check the list of companies who have increased their dividends for atleast 15 years. MarketBeat has a decent screener to get started. 2. Now short list the ones with attractive yield. (You just don’t want them to be too low where any increase is meaningless) 3. Check the payout ratio with respect to profits and free cash flow. You want these to be ideally under 65 percent. 4. Now look if the profits and revenue(both) are increasing or atleast stable. Minor decreases should be justifiable and not common. 5. Ask yourself if you see the company doing well after 5-10-15 years. You don’t need to be 100 percent correct here. Our goal is to remove the obvious outliers. 6. Reinvest your dividends as much as possible. For extra return you can sell out of the money covered calls on your holdings but that is a bit too long to explain here.
Companies prices falling is where short selling comes into play. And if its a short term drop, not a company failing cuz its a bad company but a temporary drop in prices, then buy more while its cheap. There is always a chance you could be wrong but if you are sure it could be very profitable.
Tax laws may also disfavour dividend investments. In NZ, for example, dividends are taxed, but capital gains are not, so it makes sense to focus on capital gains instead.
Without dividends, the only way to extract value from a company, no matter how successful, is by losing (selling) parts (or using it as collateral for loans). Something about an increasing share price of a company that never pays dividends feels absurd.
Would have been prudent to mention that issuing dividends directly lowers returns, and expected total returns for dividend-issuing companies are the same as non-dividend issuing companies. No free lunch in economics.
Hey I love your videos man! They're extremely well made. Quick question: What's the difference between the dividend snowball effect and a company reinvesting its earnings instead of giving out dividends? Aren't they the same?
Thanks for the kind comment! Theoretically they are approximately equal in impact, though tax implications for investors can influence the total return they get from each. I’ll try to expand further in my next Q&A :)
Thanks for a great video! Could someone help me with a few questions? The videos about dividends I found seem to suggest people always pick a few dividend stocks they like to buy. Why don't I see people talking about high dividend ETF or indexes as much? Ben Felix's video about why dividends are irrelevant stated that for each dollar paid out in dividend, the value of the stock must drop the same amount. I don't understand why he said that. Any ideas?
Cause it's true. A company's worth is decided by the profits they are generating, amongst other things. The company can use that money to bid for more projects, buy machinery, acquire other companies etc. This capex helps them to generate even more revenue which is factored-in in the share price as future growth prospects. But when they are giving out the money to you, they are unable to do any of the above. In technical terms, Share price=Market Cap/No of shares Profit/no of shares=Earnings per share (EPS) EPS x the no. of shares you own should be the return you make (theoretically, if the company liquidated night now). Let's say you earned $5 per share but were paid $1 in dividend, the EPS now is 4. Now, if the share price was $50, it will now be $49. And since, market cap (valuation) is usually calculated as share price/earnings per share [P/e], the market would dropped its share price, if they themselves didn't.
i have been dividend stock for 2 years every times the stock drop down i used all dividend to cover the drop as long as the dividend still their in 10 years my stock is cost 0$ to me.
Dividends don’t actually get you more money. Reinvesting dividends doesn’t get you any more money than if the company just didn’t pay dividends to begin with. But you still have to pay taxes on those dividends you aren’t using
TheAndrew0085 Some companies see a better return on cash payed directly to share holders than if they invested that in their business. Think about large corporations that have large market share in their industry. The marginal benefit of investing that cash directly into their company’s growth may not earn them an equivalent increase in revenue since they already own a large portion of the market so they pay it out to investors as an incentive to either reinvest it or hold their stock waiting for the next dividend payout. Investors have an incentive to hold the stock and that contributes to the company’s market value.
That is why I am buying Dividend Kings and Aristocrats when they are punished by Mr Market and are on sale and collect this nice fat dividends which I do reinvest allowing them to compound
Liked and subbed. I like the way you explain things and the fact that you have Canadian content is a bonus since certain rules differ between the U.S. and Canada.
For most of the video he talked about how you can reinvest your dividends... But that's exactly what happens when you hold growth shares, where the share price increases. It's just that instead of a 5% dividend, you get a 5% share rise.
And they are more efficient at generating RoCE. Although, I suppose it's human psychology of wanting $100 today more than wanting $105 tomorrow. As in, it's a sureshot hundred dollars today vs who knows what might happen in the volatile, unpredictable, evil markets tomorrow. And a lack of understanding the workings of the economy, share market, businesses and conviction growth stocks.
Richard you did your usual excellent job with this video! This topic is always relevant. I usually take advantage of DRIP but sometimes I take cash dividends just so I have at least some cash income to help pay the bills. Thanks again! 👍👍👍
Dividend investments might be my only reason to get into individual stocks but not until I've learned to research companies properly as I am a new investor. I bought myself some shares of an S&P 500 index fund and it pays me dividends but they automatically get reinvested. The money from the dividends was decent. I think it's like 1%. I invested a little over $10k and I got around $100 from dividends. But obviously, I can't use that money because it went right back to buying more shares. LOL
Transaction fees for highly liquid assets are minimal these days, and certainly doesn't compensate for the extra growth that growth stocks provide. Market fluctuations can be handled with diversification. Some are up while some are down, so you just sell whichever assets are doing better at the moment. Taxes are great for long-term capital gains. There's no such thing as "certain returns." The best certainty you can expect comes from diversification. Growth has the same snowball effect as dividends, as they are reinvesting behind the scenes. Same snowbell effect, just a bigger snowball. It's simply more profitable to get income from selling shares of growth stocks than from dividends. And even if you do choose a dividend strategy, having some exposure to growth to rebalance from can help goose the number of shares of your dividend exposure and therefore your amount of dividends over time.
I love getting dividends from my mutual funds, whether it's annual, quarterly or monthly, and then there are end of year bonuses - it's Christmas, it's Christmas, it's Christmas.
My grandma bought me different Dividend stocks when i grew up just 3-10 shares for every birthday. I remember when i learned to read it was so cool to get those dividend letters in the mail. I felt so adult, recieving grown up mail every month (Windowed envelopes). now every dividend reminds me of grandma, that sneaky old lady.
Dividend investing is considered to be a defensive strategy while growth stocks are considered to be offensive. Just like a shield and a sword it needs a balance between the 2. Unless you become Captain America and the mastery of shield investing.
Shouldn't the fact that the company is paying dividends ultimately decrease the share price? Since that money has to necessarily come from the firm's cash reserves, meaning lower Assets and EV...
Hmmm... (this is concerning canadian tax btw) but dividends being eligible or not doesn't have much of an effect as a whole. In fact, the dividends being eligible means that the corporation paid a higher tax rate on that income in the first place. The dividend tax credit just makes it so that the net tax whether someone earned the income through a corporation with the small business deduction, a corporation without the small business deduction, or personally, is about the same. There's actually a benefit to income that would result in non-eligible dividends because that income is taxed at a lower rate in the corporation which results in a deferral benefit.
REITS are the best stocks for div. They have to pay a bigger % amount of div or they pay taxes. Soo, you get a bigger div and reinvest it in the company. At the same time your stocks are owned by an LLC which has no death date (no death tax) and yields no payment to the tax man...
If you own a church that is incorporated, you are not legally required to report the income the church receives, and any passive income source the church receives (rents, royalties, dividends, interest, capital gains, etc.) is tax-free! For example, I invested $250k into a single REIT with an extremely low volatility (0.2 beta), a very high yield on cost (12% when I bought in, back in January of 2018), and a high distribution frequency (monthly dividend payouts). At a gross yield on cost of nearly 24%, thanks to me leveraging this stock on 2:1 margin with 3% interest on $250k borrowed, I'm still netting a yield on cost of 21% annually. I pay no taxes on the gains, since they are held in my church corporation's name, and I am not legally required to report the income said church earns from the dividend distributions. Since I have reinvested all the monthly dividend distributions every month since January 2018, about 17 months in so far, I have managed to compound my stock by 1.75% per month, which is approximately 23% on an annualized basis--or 34% since I've owned it. Since I'm not paying any taxes on the gains, and I've reinvested all the dividends via my church-held stock, I've netted at least 30% after approximately one and a half years, adjusting for inflation, since January 2018. Assuming I can keep up this level of performance, I will have multiplied my money by 8 times in 10 years (120 months). Of course, that is assuming I'm capable of maintaining that return, which probably isn't going to happen, unfortunately.
In some ways, stocks like GSBD where the stock price doesn't go up is the best because you can DRIP those dividends back in without the share prices rising.
What you didn't explain is that when a company pays dividend the stock price decrease by the same amount of the dividend paid so what you said is not 100% accurate. If you have a share worth 20$ that pays 1$ dividend at the end of the year you would have a share worth $19 and a dividend of $1 dollar.
Another way to make high returns is simply to look at total returns (div plus capital gains) not focus only on dividends. Way less hassle and research. Index funds for the win!
If you're using a dividend reinvestment strategy, wouldn't it be more tax efficient to look for companies that do share buybacks? Either one involves the company giving back to its shareholders, and the shareholder owning more of the company.
You know as a newbie learning about investing I thought it was going to be hard to learn, but it seems really easy. Just look up the company, see what they are and there rate of return, invest smartly and then you make a profit. Was it really that simple?
Yes but most people aren’t discipline. You buy a stock and it immediately goes down. You get scared and sell. Then the stock goes up and you cry that the market is rigged when in reality stocks go up and down every second of the day
If you are a newbie wanting to learn, I advise you to check Ben Felix channel because his explanations are much more based on facts and not investing clichés that will provide you less risk adjusted returns.
I SO love DRIPping leveraged tax-free municipal bond funds. (Okay, the payout isn't really a dividend, but it behaves the same.) If my city of New York ever stops paying its obligations, it's all gonna be over anyway. But I also get other US funds; they're not tax-free for NY, but the big hit is federal, so I pay up -- it's small. Actually, the broader funds pay a little higher, but they're not the Big Apple. Maybe the regular old AAPL will run into trouble, but I think NYC is here to stay, at least for MY lifetime. I've had other strategies over the years, but this one balances my loves of eating well and sleeping well. Alas, you can't strike it rich, and have to work your day job for the duration of your productive years. For that, I can only recommend doing something reasonably lucrative that you enjoy.
![Felix "Unfair" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/Oswujxm2Ag0/mqdefault.jpg)
I'm just a humble dividend farmer tending to my stocks.
It ain't much but it's honest work
That was funny 🤣 A1 comedy 👌🏿
Love the term! I think I'm gonna start using it.
Your att crop has gone bad
Poison dogecoin stock
> "Why Investors Love Dividends"
The same reason why landlords love rents.
If the funding source of the dividend is not coming out of cash flow produced by operations, then it might be better to NOT receive a dividend. Some companies will resort to tomfoolery in their accounting just to deliver a “dividend” to shareholders. It masks poor performance and can hurt you later on down the line. A legitimate dividend? Bring ‘em on! We love them.
Ty for saving me 8 mins
bingo. I love the first of the month. Those direct deposits are lovely.
@D Mack but that is pretty tough if you are self-employed. How do you even place independent stocks in a retirement account. I thought you had to buy a bundle of stocks (sort of like an ETF) when creating your retirement account(s)?
Roger Nevez I
if they borrow money to give you dividend...sell the stocks fast!
hyou zan ren
Sounds like you were holding GM shares.
That's standard operation procedure in Australia.
So sell mcdonalds and Coca Cola right now? Maybe you should rather look out for What made them pay dividend out of them borrow money to pay dividends. Coca Cola and MCD for example repurchased tons of shares so they did not have enough cash flow to pay dividends. Yet they still did since they are dividend aristocrats
@@leonschallenberg sell brkb before selling those
Dividend EPS payout ratio and dividend cash flow payout ratio are important.
A falling share price is not necessarily indicative that the company is in trouble. Mr. Market is known to be irrational as pointed out by Benjamin Graham and a falling share price may be a chance to buy a great dividend stock at a discount. For dividend safety, it's important to see if it's sustainable by looking at the payout ratio from earnings, cashflow, etc depending on the company. A low payout ratio indicates room for the dividend to grow as well as making it more likely that the company can continue to pay a dividend.
Very true! I agree that a lower price does not mean that a stock is impaired, payout is a great way to check the pulse of a company's dividend yield.
Augustin Wai kk
Trouble is, markets are rarely too irrational. Markets, for the vast majority of cases are efficient. Falling share prices are indicative of a company that is failing.
@@MrMineHeads. eh, if all other pointers say otherwise its more likely just a market correcting an overestimation of a stock price
@@MrMineHeads. I would disagree. I mean, I would probably grant that they're long term efficient, but the frequency of irrational trader behavior is far too high for me to ever agree that markets are truly fundamentally efficient. It's a good enough approximation if you're diversified and long, but anyone putting down all their money on GME at highs during the Gamestop nonsense under the assumption that the market had efficiently determined an appropriate price would have been an idiot. That kind of activity pops up over and over and over again. Even at the level of market risk, we call them bubbles in that scenario. And popped bubbles don't mean a company is necessarily failing.
One thing to watch out for which the video briefly touches upon is the taxation. Unqualified dividends in the US are taxed as income, so while you may end up reinvesting the dividend in more stocks, to the IRS, you've been "paid" so you'll owe taxes on that dividend. This may mean a bigger tax bill at the end of the year and depending on your tax bracket, might be something to take into account (vs a capital gains tax which you can control by controlling when you sell the stock).
DRIP is tax free*
@@mmmbiscuits1211 It depends on the type of dividend, but most of them are not tax free in the US
I live in the USA. Dividends are tax free when you sign up for DRIP. If you just take the dividends they are taxed at 15.1% on the 1099-div IRS form. @@louisphily1
My friend was telling me the wonders of a high dividend stock . . . in a gold mine. Like, literally, a gold mine.
When the mine went dry, it was all gone.
So much knowledge for a French. In France, no one talks about finance nor stocks. It’s incredibly the wealth you can build with finance.
That you, English speaking people for sharing your knowledge for free !
What do they focus on in France? Existentialism? Your president was a former banker.
@@rhythmandacoustics Money is very taboo in France.
@@Lozo39 do the gillet jaune people know what is going on right now economically?
@@rhythmandacoustics I don't think many people know because economics are not taught for everyone in high school.
@@Lozo39 insanity!
This is exactly why it's a good idea to have some portion of cash on the side ready to put into proven sustainable dividend paying companies during a downturn, when they are at a discount. High yields aren't inherently bad, but they aren't the independent variable and you shouldn't be basing your ultimate decision on yield alone
Actually, you’re probably better off doing the reverse. The bounce up is much higher w/ speculative companies.
Theoretically, if you thought you could time the market, you’d shift to low beta (blue chips) during the good times to get a relatively mild fall. Then you’d tilt towards speculative stocks for the bounce up.
The above said, you should almost certainly NOT try to time the market.
Timing the market is generally a dogshit strategy and you're pretty much always better putting money in every month unless you have perfect market information (you don't)
Outstanding video, Richard. Wow!
Thanks Brandon!
You sound like a mom complementing their son. It is a great video though.
William Crosswhite lmao
@@Solid_Snake99 hahaha
Excellently explained! I've been researching dividend stocks to invest in and this helped clear up a few deep seated questions I had like the consequences of high pay ratios, dividend cuts, high dividend yields etc. Very helpful
I have been building a dividend portfolio for quite a few years now and am starting to see the compounding, it's great. I make about $1100 a month in dividends which go straight back in to buying more dividend stocks. In Canada there are a lot of great dividend companies to choose from.
@Josh Landon Just look up the "Dividend Kings" and "Dividend Artistocrats" list. Pick stocks that you like, and build a portfolio.
@@joshlandon3327 HYLD
13.25% (rn I think?) An etf made up of mostly US stocks, so you get a high yield, low volatility, exposure to the US market on a TSX ticker, and if it's in your TFSA, no tax on those dividends
@@e.d.t432 covered calls are super risky investments. The dividends are paid out from the sale of call options, which is VERY different from a profitable paying out excess cash flow
Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.
As you plan your retirement, be sure to
talk with a financial advisor who can help you make the most of your retirement investing scheme.
@@harrisonjamie794 Very true, If you're looking for help
building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.
@@DavidAntony-gq7id How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.
@@harrisonjamie794 KRISTIN GAIL CUNNINGHAM. On the internet, that’s the financial advisor I use. She’s verified; you could also read more about her and then communicate with her. it’s always good to do your research before putting your money into any investment.
@@DavidAntony-gq7id Thank you so much! Found her webpage and left a message. Hopefully, she responds.
Nice video, Richard. My concern with dividend-focused strategies is that they typically end up ignoring parts of the market like small and mid caps. I guess if you can pick the right dividend stocks it might not matter much.
Totally agree, I am actually far from an advocate of dividend-only strategies. The video was more so a commentary on why some people go that route, but as with every strategy there are pros and cons!
The Plain Bagel got it. Excellent primer!
First time I have seen this channel, very high-quality production, good video! I love dividends too
Thank you!
this video is also assuming you dont add any extra of your own money. when you combine your own money each month plus dividends it gets great!
@Erick Payan im gonna put my eggs in 20 baskets lol!
Put all your eggs in 10 baskets but not 100 baskets.
Not everyone own company just to want money back.
Exactly! The real goal is to eventually buy enough to get another share and use anything left to fund a new investment. Currently have 5 drips 2 of the buy multiple shares each month. Just bought 10 shares of Foot Locker on a 20% dip. Any stocks your looking into or that hold a big portion of your portfolio?
Imagine what would happen once you realite why the other stocks are called "growth stocks".
I like companies that have the ability to retain and compound earnings at high rates, instead of paying me dividends that get taxed and I have to go to the trouble of finding a new way to invest the money.
@@jacklan4103 Haha yeah, they have to have the extra money, that's true.
this channel is extremely underrated
The strongest force in the universe? Money that compounds on itself."
-Albert Einstein
Einstein was talking about compound interest in general, the quote doesn't specify money as you indicated. For example, gravity has compound interest effect for mass. The more mass you have, the stronger becomes your gravitational attraction, and so you accumulate more mass per unit of time. Like compound interest, this accelerates your accumulation in a passive fashion.
@@theamici Like a black hole that keeps eating matter around it?
He didnt say that did he?
A Human-Centerd Capitalism to combat Economic Automation. Its about time we ballout the American People. Americans know how to best spend their money. What if, put a $1000 DIVIDEDS a Month in every Americans hands.
Democrat, Andrew Yang
He Branded " Socialism " PERFECT
@@theamici are you saying someone miss quoted Einstein on the internet? No way
BIG thing to consider for dividend stocks is the neat trick you can do within a Roth IRA:
While you have to pay tax on dividend reinvestment held in a traditional brokerage (and thus a slight cash-flow consideration), dividends in a Roth IRA are not taxed = MORE SNOWBALL
Nice presentation! As a self employed contractor, I like growth stocks (GS)better than dividends paying stocks because you have to pay tax same year you got dividends (instead of pay tax when you sell growth stocks). I sell stocks to supplement my income. Some year I made almost nothing and another year I got good paid. The ability to spread out the income to reduce some tax is definitely plus for GS
-Albert Einstein 8th wonder in the world is compound interest. We either learn it or ruled by it. or Rule of 72 is good here too. Folks love dividends, passive income for those who like "security".
well said, I'm one of those who prefer security
I love dividends. I usually reinvest them so essentially I get a raise every quarter (or month) for doing nothing.
Bryan Ho that’s basically what investing is though. If I invest $10 and the company grows by $2, I have $12. I’ve just made two dollars. If you invest $10, the company grows by $2, and you get $1 back as dividend which you then reinvest, you are at $12. We are at exactly the same place. This is a gross oversimplification but basically you should be focused on total returns not dividends. Dividends are an important part of any portfolio but to invest exclusively in stocks that pay them is to ignore an important part of the market for what basically amounts to accounting differences.
You do know that dividends is not extra money
These videos are the cold splash of reality I really need to be smart with my money and *not* do something stupid. Thanks a lot Plain Bagel :)!
Very great! Very informative while being easy to understand. Can't wait to see this channel grow!
Starting to love this channel
Wow, buying a part of a company for - wait for it - the *profits* and not for speculation. Really unorthodox
RIP Bitcoin
You know speculation in stocks really comes down to speculating how much profit the company earns in its lifetime right?
@@bibo2728 Theoretically it should. Well, kind of. You can also short-term speculate on how others will invest in it, and if you expect stock prices to go up because people have been fooled or fooled themselves, you win. Even if the company won't produce profits.
@@cheydinal5401 I agree here. I think most people nowadays speculate on others trading trends rather than long term prospects of the company i.e. $GME
@@bibo2728 The problem right now is that people don't know a single thing about most of the companies they invested in ... they only follow the herd and pray for a rising price. They don't know about balance sheet or about futur prospect for the company.
REIT and telecommunications are also good for them sweet sweet dividends IRM and VZ come to mind
I like VNQ and VYM. I own a few individual stocks but ETFs allow me to sleep better at night.
@@venictos My favorites are VCIT and PSA. Russian telecom giant MBT is a great, relatively little known among American amateur investors, high div. yield company
Just be aware they are not qualified dividends if they are a REIT, so it counts as taxable income
Unless it's Frontier Communications (FTR). First stock I ever bought... and possibly the last. It was a telecom stock with a good dividend, and I was interested in their performance because they took over Internet service from Verizon in my region. The transition was rough, but after several months, everything was back to normal. So I figured as people realized their service wasn't that bad after all, they'd stop losing customers, Apparently first impressions count for a lot though, and the company didn't have the best reputation in the pre-fiber days, so people just irrationally hate them now. A lot of former Verizon customers are basically angry that that they got forced into a contract with Frontier against their will that they can't terminate without a fee, and tend to switch out of spite.
T and VZ are the way to go. CMCSA and DIS are looking good too.
6:53 Forced to cut dividend and stock price drops
7:20 Chasing high yields can be a dangerous play
When I first started investing in August 2020, I bought high dividend yield stocks. It worked well for 9 months and I collected good cash, but then companies started cutting or eliminating their dividends and stock prices fell and it took about 4 months of moving things around and re-investing to recoup my losses.
I later learned that if I had just invested in stuff like Microsoft or Google from the beginning (which pays less than 1% and 0%), my portfolio could've been up a lot more.
And just now when I started getting into the "solid" companies like Microsoft and Google, the market decides they're overvalued and hits us with -10% correction.
There are also a ton of problems with this strategy: (1) 60% of us and 40% of intl securities don't pay dividends -- this reduces your portfolio diversity. (2) the dividend payout and earnings growth come out of the same pie -- so if your strategy is to simply reinvest the dividends what did you gain? (3) worse, you're forced to end up paying taxes on the dividends instead of having the advantage of holding and only selling the shares at a time that has a more favorable tax treatment for you
Always diversify your portfolio to hedge your bets.
If no gain then why feel good when dividend come?
You can always choose companies that both appreciates and gives dividend . A number of things can happen 40-50 years from now. You could be incapacitated by health issues and not be able to sell your CG stocks for income. There could be an event which causes the share prices to crash and you may not get the Capital Gain that you wanted for your immediate expense when liquidating the stocks. Relying on dividends for continuous income stream will help minimize tinkering with your portfolio at the age of 70. Paying more taxes now is not the end of the world and you can always create accounting structures to minimize present tax .
I don't see any point in owning stocks that does not provide regular dividends. It would be like buying a rental property and receiving no rental income but waiting on capital growth to for income 20-30 years from the time of purchase. Investing = The productive use of money to obtain regular income. Relying on CG only is speculation.
2023 example of a “dividend trap”: Hawaiian Electric. As of this writing (30 Nov 2023) their profile on various investment sites shows a dividend yield of 12-14%.
_However_ , they’re partly responsible for the Maui fires earlier this year, so they face an unknown but probably large liability for damages. This means (1) their share price got smacked down, and (2) they suspended their dividend to free up cash for when that liability comes due. Someone who doesn’t know the context could buy in thinking they’ve found a great income stream, only to learn it’s not coming anytime soon.
The thing about shares, is the risk though. In general they are nice, but for them to have a competitive return, you need to be really into it and active. Otherwise, renting properties may yield more.
Ah, but if you know what you are doing and invest in startups in just the right time, then sell again at the right time..!
That’s so much work tho....
This comment gave me anxiety lol. No evidence to suggest renting properties gives higher yield than stocks. You’d have to own properties in every country in the world to have the diversification you would need to come close to competing with stocks with just real estate. No one knows enough of what they are doing to invest in start ups at just the right time to consistently make money that way. Those that make money off of start ups consistently are very rich, they have enough capital to get hit with many failures before stumbling on a winner. Basically if you have enough dice to roll, you’ll eventually get a six. That doesn’t work if you have 1 dice to roll. If you only have $100,000 to invest, investing it into 1 extremely risky investment like a start up is almost certainly going to lead to you losing your money. If you have $1 million to invest, you can invest in $1,000 start ups, increasing the probably they you’ll land on a winner. This is how VC companies make money. For the average person this is not a good way to invest money.
@@joelman1989 sadly, yes
I fell into this trap a few years ago. I'm fairly young so I have only been investing since 2019. I was only interested in the dividends of a company and I found a company that was making dividend payments of 14% annually which meant with my 2500$ I was going to be making approximately 1$ per day. This was incredible until the energy sector took a massive hit in 2020. The company cut their dividend to 0% and the price fell from around 20$ to 3.10$ in less than a quarter. It has since rebounded and started paying a 1.6% ish dividend but is now one of the least productive holdings I have.
This is very well done, Richard.
A very comprehensive dividend primer!
Thank you!
Look who it is.
You deserve way more subscribers... the fact that videos from Cardi B are much more popular than educational videos is a problem.
we live in a society
Don’t jinx it man, we want ppl to stay ignorant, can’t have everyone making smart financial decisions or the smart ppl would make less
Broke bitches stay broke and complain, hustlers like us stay educating ourselves and making this money
@@Dankyjrthethird and you suffer from greed, we should wish for better for everyone. The world would make more money together if we could educate people better on things like this. Economic growth> a small percentage of population making alot of money
TheDankLord but more people in the market
More cash flow in the market
Investments are very subjective. Taking the advice of someone without a FiNRA license is just plain foolish.
Lovely breakdown 🥯
Help I am just a teenager stumble across to this video and now i am hooked with this channel and the stock market.
How to find good dividend stocks?
1. Check the list of companies who have increased their dividends for atleast 15 years. MarketBeat has a decent screener to get started.
2. Now short list the ones with attractive yield. (You just don’t want them to be too low where any increase is meaningless)
3. Check the payout ratio with respect to profits and free cash flow. You want these to be ideally under 65 percent.
4. Now look if the profits and revenue(both) are increasing or atleast stable. Minor decreases should be justifiable and not common.
5. Ask yourself if you see the company doing well after 5-10-15 years. You don’t need to be 100 percent correct here. Our goal is to remove the obvious outliers.
6. Reinvest your dividends as much as possible.
For extra return you can sell out of the money covered calls on your holdings but that is a bit too long to explain here.
Id like to hear that long explanation on the latter part~ : )
One big issue with dividends is asset location since they tend to be taxed higher than capital gains.
Fábio Holder ✌🏻
Companies prices falling is where short selling comes into play. And if its a short term drop, not a company failing cuz its a bad company but a temporary drop in prices, then buy more while its cheap. There is always a chance you could be wrong but if you are sure it could be very profitable.
Tax laws may also disfavour dividend investments. In NZ, for example, dividends are taxed, but capital gains are not, so it makes sense to focus on capital gains instead.
Without dividends, the only way to extract value from a company, no matter how successful, is by losing (selling) parts (or using it as collateral for loans). Something about an increasing share price of a company that never pays dividends feels absurd.
Stock buybacks exist which can preserve your ownership of a company while providing you with an income
Well done Richard, explained the topic in a simple but comprehensive way...also the editing was great!
Happy to subscribe to your channel :)
1:11 What does "chasing the high steels" mean? Does that mean buying primary industries?
quietthomas the “highest yields” :P
this video was the video that made me want to start investing. thank you
8 minute video equal to 1 semester of college. so much knowledge dropped that was also super easy to understand
Great video! Came here from Canal do Holder
"Why Investors Love Dividends"...MONEY
Great video on dividends. I prefer dividend reinvest. It increases my return.
Excellent video, clear and to the point.
I was surprised when I looked at the number of views and subscribers. The quality of this video is of a much bigger channel.
Keep it up.
Thank you that’s very kind!
Coffey ...and bagel?
Would have been prudent to mention that issuing dividends directly lowers returns, and expected total returns for dividend-issuing companies are the same as non-dividend issuing companies. No free lunch in economics.
Compound interest and dividend reinvestment are the only two things you will ever need to be wealthy.
Hey I love your videos man! They're extremely well made.
Quick question: What's the difference between the dividend snowball effect and a company reinvesting its earnings instead of giving out dividends? Aren't they the same?
Thanks for the kind comment! Theoretically they are approximately equal in impact, though tax implications for investors can influence the total return they get from each. I’ll try to expand further in my next Q&A :)
Your logic is stronger than most people on this thread my friend. Be proud of yourself. They are basically the same thing.
Investors choice is the difference
@@joelman1989 i mean if thats true the arent dividends a percentage of a stock you sell
Thanks for a great video!
Could someone help me with a few questions?
The videos about dividends I found seem to suggest people always pick a few dividend stocks they like to buy. Why don't I see people talking about high dividend ETF or indexes as much?
Ben Felix's video about why dividends are irrelevant stated that for each dollar paid out in dividend, the value of the stock must drop the same amount. I don't understand why he said that. Any ideas?
Cause it's true. A company's worth is decided by the profits they are generating, amongst other things. The company can use that money to bid for more projects, buy machinery, acquire other companies etc. This capex helps them to generate even more revenue which is factored-in in the share price as future growth prospects.
But when they are giving out the money to you, they are unable to do any of the above.
In technical terms,
Share price=Market Cap/No of shares
Profit/no of shares=Earnings per share (EPS)
EPS x the no. of shares you own should be the return you make (theoretically, if the company liquidated night now).
Let's say you earned $5 per share but were paid $1 in dividend, the EPS now is 4.
Now, if the share price was $50, it will now be $49.
And since, market cap (valuation) is usually calculated as share price/earnings per share [P/e], the market would dropped its share price, if they themselves didn't.
i have been dividend stock for 2 years every times the stock drop down i used all dividend to cover the drop as long as the dividend still their in 10 years my stock is cost 0$ to me.
Love the metronome! Kidding. Closing window before my headache takes over.
Dividends don’t actually get you more money. Reinvesting dividends doesn’t get you any more money than if the company just didn’t pay dividends to begin with. But you still have to pay taxes on those dividends you aren’t using
TheAndrew0085 Some companies see a better return on cash payed directly to share holders than if they invested that in their business. Think about large corporations that have large market share in their industry. The marginal benefit of investing that cash directly into their company’s growth may not earn them an equivalent increase in revenue since they already own a large portion of the market so they pay it out to investors as an incentive to either reinvest it or hold their stock waiting for the next dividend payout. Investors have an incentive to hold the stock and that contributes to the company’s market value.
Plain Bagel is no good for keto dieters but apparently it can give resounding financial education.
That is why I am buying Dividend Kings and Aristocrats when they are punished by Mr Market and are on sale and collect this nice fat dividends which I do reinvest allowing them to compound
Thank you for this video! It's very relevant to my interests and really well made!
Kevin Street thanks! Glad it was useful
Liked and subbed. I like the way you explain things and the fact that you have Canadian content is a bonus since certain rules differ between the U.S. and Canada.
Do you recommend any platform to use that offer drip program? I use Robinhood bc is free but it doesn’t have drip
Kathy Tran m1 finance!
Yeah M1 is pretty f**king good👌
Robinhood has DRIP now
For most of the video he talked about how you can reinvest your dividends... But that's exactly what happens when you hold growth shares, where the share price increases. It's just that instead of a 5% dividend, you get a 5% share rise.
And they are more efficient at generating RoCE. Although, I suppose it's human psychology of wanting $100 today more than wanting $105 tomorrow.
As in, it's a sureshot hundred dollars today vs who knows what might happen in the volatile, unpredictable, evil markets tomorrow. And a lack of understanding the workings of the economy, share market, businesses and conviction growth stocks.
Richard you did your usual excellent job with this video! This topic is always relevant. I usually take advantage of DRIP but sometimes I take cash dividends just so I have at least some cash income to help pay the bills. Thanks again! 👍👍👍
So the dividend you actually get is based on the number of shares you own?
look for the annualized dividend payout which is the amount that can be expected to be payed out yearly per stock
per stock share*
Great vídeo! I came from canal do holder.
Dividend investments might be my only reason to get into individual stocks but not until I've learned to research companies properly as I am a new investor. I bought myself some shares of an S&P 500 index fund and it pays me dividends but they automatically get reinvested. The money from the dividends was decent. I think it's like 1%. I invested a little over $10k and I got around $100 from dividends. But obviously, I can't use that money because it went right back to buying more shares. LOL
"I got that drip" has a whole new meaning
Transaction fees for highly liquid assets are minimal these days, and certainly doesn't compensate for the extra growth that growth stocks provide. Market fluctuations can be handled with diversification. Some are up while some are down, so you just sell whichever assets are doing better at the moment. Taxes are great for long-term capital gains. There's no such thing as "certain returns." The best certainty you can expect comes from diversification. Growth has the same snowball effect as dividends, as they are reinvesting behind the scenes. Same snowbell effect, just a bigger snowball. It's simply more profitable to get income from selling shares of growth stocks than from dividends. And even if you do choose a dividend strategy, having some exposure to growth to rebalance from can help goose the number of shares of your dividend exposure and therefore your amount of dividends over time.
If the company can reinvest its money back in the business and make better return, they should do it.
Less taxes paid and more gains.
5:01 why would the share price not increase over time if the dividends are increasing?
That’s certainly a likely outcome of rising dividends; I just kept the price flat to keep the example simple
Like you said. When dividends gets cut it’s a bloodbath. But then again. Never buy and hold if your planning short term.
Came from Canal do Holder
me too 🙌🏽
I love getting dividends from my mutual funds, whether it's annual, quarterly or monthly, and then there are end of year bonuses - it's Christmas, it's Christmas, it's Christmas.
My grandma bought me different Dividend stocks when i grew up just 3-10 shares for every birthday. I remember when i learned
to read it was so cool to get those dividend letters in the mail. I felt so adult, recieving grown up mail every month (Windowed envelopes).
now every dividend reminds me of grandma, that sneaky old lady.
Dividend investing is considered to be a defensive strategy while growth stocks are considered to be offensive. Just like a shield and a sword it needs a balance between the 2. Unless you become Captain America and the mastery of shield investing.
there are only two ways to make money with stocks: dividends and buy-low-sell-high...not rocket surgery...the rest is just sales pushing.
@@gatorbuilt there's
Also intraday . Buy my course
Man, I'd love to know more about rocket surgery.
You sir just got yourself a subscriber
Shouldn't the fact that the company is paying dividends ultimately decrease the share price? Since that money has to necessarily come from the firm's cash reserves, meaning lower Assets and EV...
Yes sir! Usually we see the stock's price fall the day the dividend is paid out, though I used a flat price for simplicity
So basically dividends is not extra money
Great summary. How does one get a DRIP started?
Hmmm... (this is concerning canadian tax btw) but dividends being eligible or not doesn't have much of an effect as a whole. In fact, the dividends being eligible means that the corporation paid a higher tax rate on that income in the first place. The dividend tax credit just makes it so that the net tax whether someone earned the income through a corporation with the small business deduction, a corporation without the small business deduction, or personally, is about the same. There's actually a benefit to income that would result in non-eligible dividends because that income is taxed at a lower rate in the corporation which results in a deferral benefit.
What about ETF's with dividends. Risky?
REITS are the best stocks for div. They have to pay a bigger % amount of div or they pay taxes. Soo, you get a bigger div and reinvest it in the company. At the same time your stocks are owned by an LLC which has no death date (no death tax) and yields no payment to the tax man...
If you own a church that is incorporated, you are not legally required to report the income the church receives, and any passive income source the church receives (rents, royalties, dividends, interest, capital gains, etc.) is tax-free! For example, I invested $250k into a single REIT with an extremely low volatility (0.2 beta), a very high yield on cost (12% when I bought in, back in January of 2018), and a high distribution frequency (monthly dividend payouts).
At a gross yield on cost of nearly 24%, thanks to me leveraging this stock on 2:1 margin with 3% interest on $250k borrowed, I'm still netting a yield on cost of 21% annually. I pay no taxes on the gains, since they are held in my church corporation's name, and I am not legally required to report the income said church earns from the dividend distributions.
Since I have reinvested all the monthly dividend distributions every month since January 2018, about 17 months in so far, I have managed to compound my stock by 1.75% per month, which is approximately 23% on an annualized basis--or 34% since I've owned it. Since I'm not paying any taxes on the gains, and I've reinvested all the dividends via my church-held stock, I've netted at least 30% after approximately one and a half years, adjusting for inflation, since January 2018. Assuming I can keep up this level of performance, I will have multiplied my money by 8 times in 10 years (120 months).
Of course, that is assuming I'm capable of maintaining that return, which probably isn't going to happen, unfortunately.
And your church is? I too am a parishioner of that religion you preach...$$$
I rarely comment on videos. Great video, learned a lot more than what I came looking for.
You are the man. Thanks for not watering things down.
In some ways, stocks like GSBD where the stock price doesn't go up is the best because you can DRIP those dividends back in without the share prices rising.
What you didn't explain is that when a company pays dividend the stock price decrease by the same amount of the dividend paid so what you said is not 100% accurate. If you have a share worth 20$ that pays 1$ dividend at the end of the year you would have a share worth $19 and a dividend of $1 dollar.
Another way to make high returns is simply to look at total returns (div plus capital gains) not focus only on dividends. Way less hassle and research. Index funds for the win!
Nice video very nice man! I’m impressed of so much input and not only the fact that the video is very well made but also the info in it is top notch!
You have the best explanations I find recently, thank you
Why? Dividends are taxed at crazy rate!
Just pick a non-dividend stock that does share buyback.
Explained so well!
Very well done video! I just started my channel on personal finance and I hope it's as successful as yours. Liked and subscribed!
Love the videos man, keep them up, it's even better than a book!
If you're using a dividend reinvestment strategy, wouldn't it be more tax efficient to look for companies that do share buybacks? Either one involves the company giving back to its shareholders, and the shareholder owning more of the company.
You know as a newbie learning about investing I thought it was going to be hard to learn, but it seems really easy. Just look up the company, see what they are and there rate of return, invest smartly and then you make a profit. Was it really that simple?
Yes but most people aren’t discipline. You buy a stock and it immediately goes down. You get scared and sell. Then the stock goes up and you cry that the market is rigged when in reality stocks go up and down every second of the day
If you are a newbie wanting to learn, I advise you to check Ben Felix channel because his explanations are much more based on facts and not investing clichés that will provide you less risk adjusted returns.
Outstanding and succinct presentation!
Yes we do
This is my favorite youtube channel! Thank you for making awesome videos!
Great video! You have caught my interest.
I SO love DRIPping leveraged tax-free municipal bond funds. (Okay, the payout isn't really a dividend, but it behaves the same.) If my city of New York ever stops paying its obligations, it's all gonna be over anyway. But I also get other US funds; they're not tax-free for NY, but the big hit is federal, so I pay up -- it's small. Actually, the broader funds pay a little higher, but they're not the Big Apple. Maybe the regular old AAPL will run into trouble, but I think NYC is here to stay, at least for MY lifetime.
I've had other strategies over the years, but this one balances my loves of eating well and sleeping well. Alas, you can't strike it rich, and have to work your day job for the duration of your productive years. For that, I can only recommend doing something reasonably lucrative that you enjoy.