😂 yeah you're right - wow lol

@@mattderron lol. Good to see you have a sense of humor. Well, we all make mistakes and we all have different opinions. Most people are not 100% correct or 100% wrong. I personally focus on total returns, not how high a fund or stocks dividend percentage is.

Total return is critical, we definitely agree there. In terms of the mistake - I mean it’s just too funny because of the topic and thumbnail of the video 😂. As long as people can still get value from the content it’s all good if I screwed up simple math like everyone says lol

​@@mattderronyour video, including the error, is one of the best video's I have seen on (dividend) investing in a while. You explain everything clearly and you stay neutral all the way. Thank you. Marked for rewatching in a few years with my daughters 👍🏻.

Thank you so much, that’s amazing! I really appreciate the kind words

That's amazing, did not know it worked like that in Brazil!

I as a foreigner holding a bunch of CBD and Petrobras, pay 20% of the dividends to Brazil. Enjoy my money buddy

​@@ironrye4317 Um fato curioso é que menos de 2% das pessoas jurídicas investem na bolsa ou em algum meio de investimentos privado. Os brasileiros não tem educação financeira e nem ao menos tem consciência disso. Isso reflete em pobreza demasiada conservada pelo poder público

@@ironrye4317seems like you like to lose money

​@@mattderronthe tax rate on companies is higher in Brazil than in the US. We are in the middle of a tax system reform. There was an ideia that dividends were going to be taxed and the tax rate for comapnies would be reduced in order to keep the overall taxation in the economy the same. I am not very optimistic. Too many unknowables but I think dividends will eventually be taxed.

Plus dairy cattle is raised differently from beef cattle. If a company pays consistent dividends that tells you something about HOW they are being run, compared to something that can swing wildly at the whim/tweet of its CEO.

Exaaactly!!!

Great analogy. Not only will the cow continue to produce milk, it will likely regain whatever (little) weight was lost provided it remains healthy.

To stay in the analogy: on the other hand there is a cow that does not produce milk but instead gets offspring a lot faster than the milk giving cow. If you need the money, you can still sell the offspring and have the same amount of cow that the other guy with the milk giving cow has.

@@keineangabe8993 that would be more like having a cow that grows fast, and when you need money you sell a part of the cow and hopefully it grows back 😅

Thank you I appreciate it!!

Excellent conclusion, I fully agree.

Thanks!

Fully agree 👍

Totally agree, great summary

My golden is rule is, do I have enough for retirement and live the way I want? Now double it. I will not retire before I reach that 200% goal.

Facts💯

But what does that have to do with the dividend argument? I can just restate the same thing again and again, selling shares is the same as collecting dividends even in downturns, so if you can not count on selling shares for retirement, you also can not count on dividends.

@@larsleo7059 Not exactly. Selling shares put downward presser on the price of a stock. In the same way that buying shares will put upward presser on the stock. Will one person selling 100 shares of Amazon make a difference, no. Free cash flow in many ways is more important to look at than "value" or "growth"

Have you heard of bonds? Have you heard of portfolio rebalancing? Look into it.

The same works for me

It makes me feel like dividend investors don't understand diversification. The choice isn't dividends stocks vs general stocks by themselves. You don't need to pull money during stock markets drops if you have some combination of cash reserves, laddered CDs, money market funds, bonds, annuities, REITs, real estate, and/or alternative investments. If you don't want to sell stocks during a recession then it's not complicated to make a plan for that

@@rayzerotI don’t like the idea of having to sell an asset just to touch the cash. I prefer to keep the asset while receiving the cash flow.. even Kevin O’Leary from shark tank said “if an investment doesn’t pay you anything, it’s not an investment” something along those lines but I agree.. plus dividends allow you to get more loans from the banks, they count as “income” where as Capital Gains does not count as income and you can not receive loans from banks to purchase investment realestate or anything…

But don't you get less dividend when the stock price goes down?

@@cavejohnson4054 Dividends are unaffected by price changes. Dividends are part of company's profits (not price on market) and are paid according to the shares you own.

If you want a money printing machine, growth stocks print more money. And a small amount of planning and diversification will keep you from needing to sell stocks during a recession. Cash, REITS, direct real estate, institutional bonds, money market funds, annuities, alternative investments... take your pick to cover those multi-year dips and then reap a well earned reward when the market recovers

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Tell me you don't know how dividends work without telling me!

@@_R8x_ 🙄

They certainly can be. One of the big issues with buying growth stocks is that growth is finite. At some point whatever market will be saturated and any further growth would violate local antitrust regulations. For most people though, just a set of index funds covering stocks and bonds both foreign and domestic is good enough. Doing much better does require a fair amount of work and a bit of luck.

You’re right it is very similar, the only argument you could make is that stock buybacks can be stopped and started as company conditions change without too much issue. Dividends once you start you kind of have to keep them up since the market treats a dividend cut as bad

There is no taxes for stock buy backs while dividends are heavenly taxed. It should be clear what model should be prefered.

@@johanneswerner7649qualified dividends are NOT heavily taxed. It’s usually the same as your capital gains rate, and instead of holding for a year to get it you just need to hold for a 60 day period surrounding the dividend

​@@johanneswerner7649Non qualified dividends are taxed as ordinary income but after the first year eligible dividends become qualified dividends and are taxed at a long term rate of 0% for the first $44k. I supposed you could make the argument that you could simply sell investments up to $44k at 0% every year but if you hit a recession and the market is down you either have a cashflow issue or sell at a loss potentially greater than a single year of dividends at ordinary income rates.

Good call. SCHD is a great one, I have it in all my portfolios as a long-term focused "steady as she goes" investment. Nice regular distribution that I feel comfortable just putting on reinvest; between auto-reinvesting the distribution and my additional contributions I feel like I can comfortably not worry about it and in 20 to 25 years it'll be a nice part of my portfolio's value and income generation.

It's amazing how that works lol

How does the saying go? A stock account is like soap: the more you touch it, the smaller it gets.

@@Qichar that is great. I'm stealing it.

Dude ignore these youtube clowns, find a CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

😂😂 do you a link to this study?

But you’re not “getting paid” in any meaningful sense. You are no better off than being in an equivalent non-div player.

@@sybo59 I said I see the psychological effect. Real effect… insubstantial. Psychological: I understand why people gravitate to dividends because it feels good, much like many things we do that aren’t really valid but make us feel better.

Dude ignore these youtube clowns, find a CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

This is the part that MOST people refuse to acknowledge... As long as my Div stocks dont go belly up, im actually somewhat happy to seem them fall in value for a time. Now that may not be the case when im 60+ and retired, but it is at 38 and rolling dividends...

Most of us probably buy more stock when it’s “on sale” and as it recovers the appreciation balloons on top of getting more dividends. Currently my dividend stock yield aggregate plus the appreciation is similar to my growth accounts.

Exactly. Making it sound like the small price drop ex-dividend is permanent is some strange logic. If things worked like that, dividend share prices would eventually fall to 0.

Totally agree on that - definitely psychological when you're talking about decades of investing

The only thing psychological happening for me would be knowing how much money I was throwing away in taxes every year by keeping a dividend stock portfolio. "Then just put those stocks in tax-advantaged account", you may say. Also no. Because your tax advantaged accounts, especially Roth, should be your absolute last accounts you tap for income in retirement due to their tax benefits and so should have the longest time horizon. And because growth has historically beat out dividends (by a lot), again, it makes zero sense to hold them there either. If you're worried about wild price swings as you're nearing retirement, then maybe you should be following an allocation glide path like every single financial advisor who knows anything will tell you to do. Even the argument that investors are emotional is not really a great reason to recommend dividends. Education is very important in finance and the more educated individuals will be less likely to try timing the market or fall victim to panic selling. Why not just educate people on the fundamental principles of how long term investing works instead of just saying "just buy dividend stocks and the dips won't be as bad"? Along that same line, your example about meta isn't great because a well-educated investor would have never bought any single stocks in the first place because they know that stock picking is a fool's errand.

I don’t necessarily disagree with your view, dividends come with taxes (in a taxable account). I prefer them there because I want ultimate income flexibility, but I realize that’s not for everyone. The main thing for me is picking great companies, whether they pay a dividend or not is a secondary consideration. If you’re absolutely against dividends and can find more than enough great companies that don’t pay them - then that absolutely works for you.

@justthebrttrk I agree with most of what you said, except for single stock picking. If you picked big cap companies that are leaders in their field...they are better than any etf or mutual funds performance wise...but you just have to keep up with the news and sell it once things look bad for their company or they lose this leadership. Mutual fund and etf, I admit, you can just leave it there and not think about it

@@tonyku5354 most big indices are already heavily weighted in those big successful companies. And you just described how to time the market lol. The research is in on that, you'll lose out to just buying the index 99% of the time for 30-year horizons. Just buy the index and leave it alone. Zero effort, zero stress, guaranteed results every time.

It's impossible to know exactly what a stock will do price wise on any given day. If you believe in the company long term then just keep checking that their story is what you expect, and you should be fine.

If it makes you feel better i dumped 10k in when it was 58 a share...still have 0 regrets

I actually have lost money in company I did not sell! Their are a couple of different ways this can happen.

O stock is down YTD, 1 year and 5 year but a lot of people buy it because it's good for monthly income and it pushed a lot with dividend investors. ABR is up YTD, 1 year and 5 year and they have a much better dividend CAGR, but Dividend Kings like O deserve a premium price.

Trust me I know, I do own both! I am all about monthly stocks. I actually own 12 monthly dividend stocks and all but one ETFs (SCHD) are monthly.

it includes dividend reinvestment. In terms of "should we" it really depends on your situation. If you're using the income to live then probably not. If you're reinvesting for long-term growth - then probably yes?

Thank you!

Thank you very much, I appreciate it!

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Great picks!

I was thinking the same

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

What strange behavior - you've posted this comment 5+ times already. I don't claim to be a licensed advisor. Just a guy that likes stocks and learned about investing over years. I share my portfolio for full transparency on my channel for people who want to follow along. I preach that people start with index funds, do their own research, and never blindly follow anybody else's investments. You should just breathe man, sometimes just ignoring and moving on with your life is the move lol

@@mattderronoh my

You're absolutely right - it's never perfect. It's only about what works best for us individually

Doing it like that is actually quite dumb. Because the dividends are taxed at whatever your tax rate is. So you lose a portion every time you plow your dividends back into the same company. Why not forego the dividend and just let the company use that cash to repurchase its own shares for you instead?

@@johnmonk3381 I think the issue here is that the company doesn’t give you a choice. To me the most important part is to find the right companies. Whether or not they pay a dividend or do buybacks or both is not up to me. But ultimately picking the right companies overall is what leads to success

@@mattderron You are right in some way but I generally prefer to stay away from companies that pay huge chunk of their profits as dividends. Most of these are utilities, REITs, pipelines, shipping companies, in general, they are also high capex businesses, another turn off for me. I want a business that has little capex, operates with a high moat preferably a monopoly and generates a ton of cash without having to commit to huge capital reinvestments. Something like google or visa and mastercard. These are generally businesses in software and finance, with much lower capex which is why these are way smarter investments than companies that just do large dividend yields. Just my 2 cents of course, I just don't like to be paid too much in cash, because then I have pay the taxes and then figure out where to put that money now and ANY investment is better than just cash OR it is not, period. That's the point of investing. You just don't want too much cash returned to you so you can let it compound over time. So I just buy a good company that fits the bill and do nothing for the next 10, 20 years and it will do wonders minus the hassle

@@johnmonk3381 buying a portion of my portfolio is not based on the dividend completely, but often a truly good company (for example Coke) which also happens to have a good dividend. I re-invest the dividend into the stock, which gets me more shares. When I am retired, I will start using the dividends as part (not all) of my income.

What about stocks that cut or stop paying dividends altogether?

@@majorgear1021 I avoid those like poison. The majors rarely have that problem. That is why I avoid investing in the small guys. BUT I do sometimes get hit. Got one now. Alumina. So I understand your point.

Difference is companies like Intel have started their turn around as expected. T would be a better example as they have only gone down since the cut and split

Thanks for responding, glad you watched this one. I totally understand your thought process on “only investing in companies I trust to allocate profits” - makes perfect sense. The emotional aspect is a big part because it’s not just about making people happy but a key part in being successful at this. It’s easy to get caught up in the swings and dividend payments help greatly with that. The argument about “equivalent amount of shares can be sold” assumes all opportunities are equal, part of what I hoped to show is that the idea works in theory but you still have to apply it to specific companies to make it work. And companies are always unique and “unequal” to each other. Anyway, I appreciate your perspective, thanks!

The thing to realise is that a lot of divident stocks are not so just because they are set up poorly, but rather because they have such a large market share already that there is serious diminishing returns on investing more in their own sector. Sure they can invest in other markets experimentally, but they likely do not have as much of an advantage there compared to other companies built around those areas, so the expected growth would also be mediocre. In such a case it makes a lot of sense to simply just say "we are going to return a fraction of the profits as divident", as you are effectively harvesting the majority of the value in a sector already. For instance I would be much more interested in buying compariably priced shares of Amazons cloud solution rather than the entire amazon package, and just get dividents from that part of their buisness, the rest of the buisness does increase the value of their stock because it does give additional profit, but the profit per investment required in their cloud part is vastly higher, and as such I expect that I could get a higher return per investment on just their cloud buisness, at least if I can buy it before the stock prices adjust accordingly.

​@@sorcdk2880But if management thought the business would do well, they would do stock buybacks rather than dividends.

That is an excellent way to deal with the emotional ups and downs for sure

A dividend is exactly the same as selling shares after a stock buyback. At the end, the company is less valuable and your stake in the company is the same, whereas if you had held through the buyback / reinvested the dividend, you would've increased your stake.

That’s awesome! I’ve had a lot of similar experiences myself and it has definitely shaped my view about the value of both

Thanks, glad it was helpful!

This one is exactly the type of arguments that only somebody that doesn’t understand the math would do… You can do the exact same thing, selling part of the shares of the company, every $1 of dividend you receive is $1 the company value would have increased… so if you sell $1 of share, you are in the exact same situation the dividend investor is in….. That’s not an advantage at all…

@@raffaelepiccini3405 This sounds like an argument that someone who doesn't understand what dividend stocks are would make. With a dividend paying stock it doesn't matter whether or not the price increases, goes sideways or loses value. With a dividend company you are paid no matter what the stock is doing, it doesn't have to gain value for you to get your share. What you are earning is a portion of the company profits either each month or each quarter depending on how your dividend stock is set up. If you just straight up buy normal stock price HAS to increase in value otherwise you make nothing. But with dividend stocks you can continue to make profit even if price stays the same WITHOUT selling any of your stock. The best overall setup is investing in a company who not only will have an increase in value in their stock price over time, but will also pay you dividends while you wait. You are getting paid to hold the stock, so why would you go for growth only stocks vs dividend stocks? The "math" is clearly in favor of dividends in the long term.

​@@magickmynd1296when dividends are paid the cost of the dividends counts against the stock price. So if the price stays the same on the dividend stock that means the price should have gone up by the amount of the dividend that was paid.

Another way of looking at dividends is that the management is forcing you to sell X% every year whether you like it or not and you have to reinvest if you want to keep your position.

@DobesVandermeer that’s not true at all. Your ownership stake stays the same whether you reinvest or not. If you reinvest you get more ownership than you did before

Thanks I appreciate it! In terms of how I account for inflation, in general it's in my portfolio strategy. I'm looking for companies who provide dividend growth greater than the rate of inflation, so basically I'm targeting the dividends that hopefully outpace it over time.

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Balanced approach my ass. Just the first section alone, doesn't even disputes that dividends lower the stock, but rather argues they are better than stock buybacks. There are many ways the underlaying company can reinvest the cash, and most of the times it won't be stock buybacks, so centering it around that is just a garbage counterpoint. He commits a lot of these fallacies throughout and never actually shows how dividend portfolios overperform a market portfolio.

Thanks I appreciate it!

You clearly watched the video attached to some bias. The video doesn’t claim “dividends are better” at all. Quite the opposite actually. But you’d have to actually watch the video without assuming you already know what it’s going to say I guess

I'm not really sure of the tax treatment in other countries or how that works, so I'm probably not the best to answer. The only real tax difference from a U.S. perspective would be stocks or funds that pay qualified dividends versus ordinary dividends. Qualified get preferential tax treatment in general.

Thanks I appreciate it!

Thanks!

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

You buy shares with a 1% dividend yield for 1,000 euros. That means a cash flow of 10 euros. Both multiply tenfold and you have 10,000 euros in your portfolio. The personal dividend yield is now 10%, but it is still only 100 euros for a position of 10,000 euros. Now one sells the position, after taxes remain approx. 7,500 euro cash and of it one buys shares, a company with 3% current dividend yield. Then you have a cash flow of 225 Euro. That is 125% more than with 10% personal dividend yield. So what is the use of a 10% personal dividend yield that you had before?

Sleeping well at the end of the day is really the only important requirement and I think that is what a lot of us forget

I really really really really really hope that you have some of your retirement money outside of companies and the stock market. We may be heading for a huge decline. This is not financial advice because you need to make your own decisions. But go listen to a recent interview with Jeremy Grantham and then make whatever decisions seem the best for you.

@@geoffgjof Lol, Jeremy Grantham, who has predicted 25 out of the last 2 market crashes? I'm not saying it couldn't happen but that guy has perma-bear written all over him. I also don't necessarily listen to the perma-bulls either but listening to big daddy Buffett who says we should be in the market through thick and thin, sounds like homeboy has his bases covered with some dividend growth paying him regularly as well as BDCs for a little bigger income. If it all tanks then we're all screwed anyway, so cheers!

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Sorry I am new to investing, but what is BDC?

That's a good idea if the interest rate is higher than the return they would get from a buyback.

100%, I don't do absolutes either

Only a Sith deals in absolutes

@@dangreen126 lol That actually popped into my mind when I wrote it.

That's awesome, I love this!

Dude ignore these youtube clowns, find a CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

I had the same thing in mind when I started my small stock portfolio.

That's awesome, hadn't heard of that

@@mattderron It is awesome, and even better - you can get a refund for the tax paid by the company as part of your tax return.

I'm a dividend investor here in Australia and over the last 5 years my share growth has been between 70 to 80% depending on the stock plus I got Dividends.

@@user-kh9px6bg7b The past few years were pretty anomalous, it's a nice bump but we shouldn't treat it as normal.

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Interesting. Loan based off your portfolio or what?

@@ryebread447 any loans interest free cc, any loan under 6% is considered good credit. I put my yearly expenses on an interest free cc every year about 10-15k, invest the money and pay off the card with dividends. This allows me to put the money into the market faster. Basically covers one month of that cc payment doing it this way.

I'm not really sure - it would depend on the fund I guess - I'm not really understanding what you mean by "contributes to the value of the fund."

@@mattderron Yeah, neither do I. I think the argument was it's better to keep the dividends proceeds pooled in the fund rather than distribute them in a prorated way to the individual fund owners.

Thanks, I appreciate it!

Nice, glad it's helpful!

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

if that belief makes you sleep better at night..

It assumes dividends reinvested - it's basically the portfoliovisualizer backtest

@@mattderron perfect, thanks for clarifying.

Who says that for example?

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

But how is that unattractive? i personally don't care about vote rights and shareholder meetings of a company and just want to make money. So, if i own 10 shares worth 10€ each, or 5 shares worth 20€ simply does not matter to me...

@@larsleo7059 cool.

@@larsleo7059 The extreme example is when you invest in a micro cap growth. I am invested in a company that is worth under 10 million USD. The share price was at $1.20 so I put in an offer to buy 10 shares. It completed for something like $23. In order to buy stock someone has to be selling the stock and vice versa. In things like Google, Coke-a-Cola, Amazon it won't be a problem. In some micro caps they won't even move 10K shares a day and at any given second of the day there is no guarantee that anyone will be buying or selling the amount of shares you want. (You can set limits/bids and that is what I ended up doing going forward.)

The issue is that stock prices move up and down and sometimes irrationally. So basing your claim on future earnings (number of shares) based solely on price at any given time assumes the stock only goes up in a linear fashion with earnings - except it doesn't. So you'll likely be liquidating a higher percentage of your ownership stake at times depending on when you need funds. Again I think this is something that works in a math equation, but not in reality.

Like renting out the home for $1,000/month vs selling the same home on land contract for $1,000/month. One is perpetual income vs the other which depletes to nothing over time.

With much higher risk. There is a sleep at night tax.

wrong. dividends is just a way to thank your investors for the money invested, but penalize them hardly. it is better to keep the money and invest it or buy-back stocks.

Thanks!

Thanks, much appreciated!

I agree there is likely a shift in mindset when it comes to a company becoming a consistent dividend payer. Some just handle it better than others obviously

Something about having something directly from your investment also has appeal. If a company has difficulty going forward for some reason, you can have some assurance that at least I had received something. Ideally, I think half of earnings should be distributed. Of course, many factors need to be considered.

if i had 1 billion in google stock but absolutely refused to sell what do I really have?

I definitely think one of the bigger challenges is knowing when to sell in those cases. I always struggled with that. Part of why I enjoy dividend growers that are also great companies. The plan is to hold until their story changes and get paid along the way.

@@justinjohnson8398 Oy. You have $1B in stock you could borrow against if you refuse to sell. Or you could have other investments. But ok, extreme examples though that apply to practically nobody on the planet.

I've been asking that for ages. You can't buy yourself a banana muffin at the coffee shop.@@justinjohnson8398

100% agree - and the cash cushion point is a really good one. That's an area where I can improve actually. I like buying stocks so I tend to buy what I feel is decent value at the time, but holding on to more cash and jumping in at really really good opportunities when they present themself is something I want to do better going forward.

just make sure that most of your cash cushion is at least in a high interest savings account (you can find several above 4% right now because interest rates are so high). if interest rates were lower and HISAs were less available, you could have some of that cushion (not all, you need some in case of emergencies) in short term vehicles that give some decent return to fight against inflation (certificate of deposit, high yield bonds). there are also ETFs that invest in high interest savings accounts (HISA ETFs) which are another way to get exposure to good and fairly stable increases for money that you need to be able to access at any time. you might know all of this already, but just in case someone else reading isn't aware.

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

How would you fit dividend stocks in a 3 fund portfolio strategy?

Thanks, I don't disagree with you at all. I actually talk about most of those points in the video

The tax aspects are really misleading to many. You usually have millionaires talk about it more, because higher income brackets are more affected by it than anyone, and it just doesn't match up with the vast majority of people who will not actually pay what millionaires do in taxes. Qualified dividends aren't even taxed for the first $44,625 you earn. In retirement, if you include that plus social security which also isn't taxed, you can actually live quite comfortably without paying any taxes on your income. Regardless though, how many people do you know investing in the markets right now that actually makes that much/yr just from dividends? So over most of your dividend investment career you're not going to be paying any taxes on that. It's only in retirement when your nest egg has grown to a point where you actually are making that much, where you will begin to pay taxes, and it's only 15% of anything earning in excess of $44,625, up to $492,301, where it will begin to change to 20%. Now do you know anyone making $492,301/yr in dividends? Probably not. In your retirement age, after having spent 30+ years working paying nearly 30% of your income your whole life, are you going to be upset paying 15% of your dividend income you no longer need to work for? Mentally, you couldn't give a shit because that money is going right into your bank account and paying all your bills, work-free. In comparison, watching you lose 80k in a week because the president said they were going to do X and thus that causes the markets to crash, how do you think you'd feel mentally in retirement? And regardless, whenever you sell, you still have to pay taxes on your capital gains, so you're just waiting for later to pay taxes anyway on your growth stocks. It's not like it's not taxed when you actually want to harvest your gains to use said money to, you know, live. Most people who do invest in dividends aren't going to give 2 shits if they could have made 2% more/yr investing everything in growth as they fall asleep next to their bags of dividend money. Besides you should have a mix of both anyway, but regardless, this was just to point out how dumb the whole "tax problem" with dividends is, because the majority of people who do invest aren't going to be paying any for a very long time. And it's not like growth stocks don't need to pay taxes when they actually are selling their shares.

You get taxed when you cash in your growth too so you aren't saving on taxes just adjusting the timing. You may get better tax-adjusted returns with dividends because you are spreading your income over many years (depending on your specific bracket and whether they are qualified dividends or not).

Dividend in post tax, growth in pre tax. Keep it simple 🍻

@@BlackPaladin2 Correct, you have to pay taxes later when you sell, the emphasis is on later and in the meantime the tax deferral effect can continue to work, which is limited with mandatory payments on dividends. "Most people who do invest in dividends aren't going to give 2 shits if they could have made 2% more/yr investing everything in growth as they fall asleep next to their bags of dividend money." Do you know most people?

Agree 💯

i'm guessing i hold FB in an index fund, but didn't even know it had moved up and down by that much, so it was easy to hold

Yes it includes dividend reinvestment

Yeah even if the bid/ask starts there at the beginning of the trading day, it immediately changes due to normal market factors. That's why I never really understood people's focus on that criticism

@@mattderron It's a silly critique. The price dropping makes people want to buy more, raising the price back to the old level almost instantly. Plenty of dividend stocks hold firm their price while paying out 8% or more dividends/year, and have been doing so for years.

Exactly and I think one aspect that frequently gets overlooked is that the dividend was actual cash in hand to the investor. So they are getting the advantage of actual cash plus normal market movements which tend to go higher over time (generalization)

I question the veracity of this comment. I hold broadly diversified index ETFs. When they pay a dividend the share price always drops proportionately to the dividend. It doesn't instantly recover. It doesn't necessarily recover the next day or week or month. It just fluctuates concurrently with the market as expected.

@@alankoslowski9473 "veracity." that is a big word

Part of why I included the info about zero interest rates over the past 25 years is because I do think it's a real possibility that we see a prolonged (10+ year) market that is different than anybody under 30 has seen before. But obviously, we'll see

@@mattderron Well said. Business has basically been awash in free, or virtually free money for many years. It's been a party and there's no way to avoid a correction. Add to that 2018 tax cuts, then 2020 Covid stimulus, PPP loans, money printers really going brrrr, and the gov wanting to get some money back by taxing fairly heavy(already seeing it with new inherited IRA tax rules). We could very well be in a stagflation period. A decade may be about right. 20, 30 somethings can stay the course pretty much - may want to ease back on growth just a bit for a while, but it can really affect the 40, 50, and retirement age investors significantly. There's simply not enough time to recover a "lost decade" or a 10 year sideways market. I think dividends are about the only hedge to use. Bonds have offered little to no protection at all the last few years. Yea, the under 30's and even many 40 year olds in finance have no idea how to handle the current/coming market period. It could take 5 years to get back to the peak and when/if it does, it may just hover there for another 5 or so. The days of record breaking market highs every couple of months are in the rear view mirror for now and older investors should educate themselves and make whatever appropriate moves needed to protect and squeeze as much growth as possible. Dividends are more important than ever, IMO. Nice, clear explanation of dividends vs growth in your video. Kudos.

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Thanks!

It includes dividend reinvestment

Thanks, I appreciate it!

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

Others have bought this up in the comments - and I agree it's not explained well. if it's inline with expectations the price may stay relatively the same, it's more than expected or something like a special dividend - then the price may rise, etc. Part of the challenge though is everyone always says "it doesn't rise with an expected dividend it should just be $100" but the reality is that the price is constantly moving every minute of the market day, so assuming it will stay at $100 is incorrect as well.