"Theoretically, if you have dividend payers that yield 4% or more, then if you withdrew 4% per year from the portfolio, you would never tap into your principal. There is always the remaining that would compound."
That's an incorrect assumption because yield isn't profit. In order for that 4% yield to be a profit, the stock must appreciate 4% back to the closing price before ex-dividend. Fortunately, in the US, we have never had a stagnant market for 20+ years such as the Nikkei Index did from 1989 to 2012. In that case, loosely speaking, your withdrawals would truly be depleting your asset value by 4%, despite the dividend.
"To be fair, Steve's Total Return table can be significantly more or less depending on (1) when and (2) sector you bought over those years. So the Buyer's stock selection of dividend payers import too in that equation."
And there you have it. That is the key to success with investing, whether they be dividend payers or not. Share price of S&P dividend payers appreciated more than non dividend payers, yielding a higher amount of Total Return. The dividend is not causal. A financially healthy company whose earnings are growing is the reason for the success. If dividends were causal, you could buy any and every 10% or more yield POS and get rich quickly. But they're not. |
