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I can't fnd fault with dividends

#1
And the beat goes on. Even poorly performing equities like F and T continue to pay good dividends. Currently, F will be paying me $1,095 and T $1,076, which I will re-invest. PG paid me $1,197 on 8/15. Seems like a no-brainer to DRIP the proceeds in these cases. What do you think about riding this train, and the same with more promising stocks like like V and RTN or CSCO?

 I re-invest virtually all dividends, and for the past 10 years this seems to have worked well. But, at some point things will surely change.

What is your view of continuing to invest in this market via DRIP? What indicators might you look for to change tactics? My view has been that if a company is performing at least 'OK,' and pays a decent dividend, I'll stick with it. Might it be smarter to take the cash and wait for better opportunities?
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#2
If the NAV continues to drop, it does not matter if the divs are good or not. You can still lose money. If all you care about is cash flow, then I suppose that a good dividend stream may be worth it. But I care about overall performance and if a good div stream is offset by negative performance, then it is time, in my opinion, to look for something else.
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#3
Ybserp True.

As an example, few years ago I sold my entire position in CTL.  Great dividend with the stagnant share price.  Getting boring after a while.
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#4
I always looked at dividends as the cherry on the cake. It is very nice if they are there, but not the main reason to buy the stock. In some cases, it might be just windows dressing to pump up the price of a company doing poorly. In worse cases, it might not even be sustainable given their financial structure.
 
If I look at my personal stats, over 30 years of investing in stocks, I used to make about 1/3, 2/3 split btw dividend income and appreciation. Lately, it has been more like 1/4, 3/4.
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#5
I know the dividend for incone thing has been made very popular -- largely by equity marketers -- but there are a few related items worth considering:
1. Ignoring declining stock prices as long as dividends remain the same also a) ignores diminishing net worth/wealth as if that is insignificant and b) ignores the fact that diminishing equity prices typically signal that the company's future earnings, dividend paying capacity or even survival are growing uncertain.

2. The "dividend growth" story --- I'll buy a stock yielding 1.5% now and in the indefinite future the dividend will have grown large and provide me with good income -- makes little sense when considered with annuity math / time value of money.  Debt, which lives above equity in the capital stack, typically provides higher cash flows both INITIALLY and, frequently in perpetuity.   Dividend growth investors can only overcome the math with the help of atime machine -- so they can HAVE PURCHASED the right stocks 30 years ago and enjoy the cashflows now.

3. Reinvesting in bond funds or bond CEFs as a DRIP alternstive will typically crush dividend stocks as an income source --- since the powerful math is on debt's side.  (And the rejoinder that debt is risky but stocks are not only requires a Econ 101 refresher.  From a cashflow perspective, debt is serviced before dividends are paid -- and from aasset value perspective, if debt defaults, dividends are gone and stock price crashes at least as hard.)
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#6
(11-30-2018, 08:44 AM)DoubleDown Wrote: I know the dividend for incone thing has been made very popular -- largely by equity marketers -- but there are a few related items worth considering:
1. Ignoring declining stock prices as long as dividends remain the same also a) ignores diminishing net worth/wealth as if that is insignificant and b) ignores the fact that diminishing equity prices typically signal that the company's future earnings, dividend paying capacity or even survival are growing uncertain.

2. The "dividend growth" story --- I'll buy a stock yielding 1.5% now and in the indefinite future the dividend will have grown large and provide me with good income -- makes little sense when considered with annuity math / time value of money.  Debt, which lives above equity in the capital stack, typically provides higher cash flows both INITIALLY and, frequently in perpetuity.   Dividend growth investors can only overcome the math with the help of atime machine -- so they can HAVE PURCHASED the right stocks 30 years ago and enjoy the cashflows now.

3. Reinvesting in bond funds or bond CEFs as a DRIP alternstive will typically crush dividend stocks as an income source --- since the powerful math is on debt's side.  (And the rejoinder that debt is risky but stocks are not only requires a Econ 101 refresher.  From a cashflow perspective, debt is serviced before dividends are paid -- and from aasset value perspective, if debt defaults, dividends are gone and stock price crashes at least as hard.)

You certainly have the experience and knowledge on this topic.  Can you add anything about the comparative value and effect taking into account the IRS favorable rate on qualified dividends?
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#7
Catbert .'m really not very knowledgeable about taxes.  Fortunately, about 70% of our financial assets are in IRAs, and naturally, that's were I ammost active.  The taxable accounts are pretty inactive because of large tax handcuffs on many holdings.  But in direct response to your query, I figure (and this maybe naively mistaken or stupid for a lack of experience or understanding):
 
1. $100K in stock investments may throw off (generously?) $4K / year in qualified dividends.  Presume that income (VERY generously) is not taxable at all.  So after tax, I keep $4000.
2. $100K income CEFs bought today would throw off about $8.5K.  Presume (nasty worst case) the $8.5K is taxable at 35%.  So after tax, I keep $5525. 
 
So  I'm higher in the capital stack, and because I prefer CEFs to dividend paying common stocks for income, even qualified dividends are non-competitive with CEF ordinary/interest income distributions.
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#8
I can find plenty of fault with those who obsessively focus on yield rather than total return. It is a cult like mentality among posters on this forum to go for yield without regard to overall performance. People keep pumping these "dividend" stocks that keep depreciating/under-performing and giving terrible returns. People should stop caring so much about yields and just take it as an added potential bonus, and their main focus should be on price appreciation...where the bulk of gains come from. Yes, buy all the shares of AT&T and Ford you want...their stocks have been lousy under-performers for years. GE used to have its cultists, perhaps it still has some...even after they cut their dividend. These stocks are value traps. Growth stocks give such a better return.
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