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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (30432)	1/17/2019 7:37:34 PM
From: Steve Felix	1 Recommendation Recommended By JimisJim Respond to of 34328

"So the Buyer's stock selection of dividend payers import too in that equation." Good point, but don't investors always buy the best stocks? <gg> I've seen studies where the discards from mutual funds perform better then their new buys. I think I have that down, so maybe I should run one. :)

To: E_K_S who wrote (30432)	1/17/2019 10:47:38 PM
From: JimisJim	1 Recommendation Recommended By rnsmth Respond to of 34328

Agreed... and I do the same... my combined PFs yield a bit above 5% and my wife's 4.5%... we have lower yielding names -- lots of them and some under 3%, but we also have the 5%, 6%, 7% etc. names, too in REITs and MLPs (and AT&T these days!)... and while my wife has more of the lower yielding names, I have 5-6 CEFs paying 6%-16% current yield and all but one paid monthly... eventually, I plan to move most of the CEFs back to more traditional DGI names, but not until I am 100000% sure our income stream is safe, durable and increasing faster than inflation -- a couple more years at most probably.

To: E_K_S who wrote (30432)	1/17/2019 10:54:43 PM
From: JimisJim	2 Recommendations Recommended By berniel E_K_S Read Replies (1) \| Respond to of 34328

Oh, and while the math you presented for the 4% rule is obviously correct, I'd bet that 90% of the folks retiring and using the 4% rule somehow missed the distribution part -- when I hear folks like Orman or Cramer talk about it, they are always talking about non-divvy stocks and selling 4% of the acct. value -- I know my brother earns just over 1% on his money and that he pays a guy that's fee based on money under management that probably soaks up more than that 1% divvy/dist. income he might be earning. Think about it... what does Suzy always pound the table about? Buying broad or whole market index funds that pay less than 2% on average and many do not pay at all... so how are they going to meet RMDs and/or take 4% a year in distributions... just how do they get that money without selling some passive index ETFs or mutual funds??? And Cramer is all about trading regularly... buy, sell, buy buy buy... sell, sell, sell.... those are his trademark remarks! I remember someone once had a website where they used theoretical money and invested/sold based on Cramer's remarks every day... and they had a chimpanzee throw darts... the chimp won every year...

To: E_K_S who wrote (30432)	1/18/2019 1:10:19 AM
From: geoffrey Wren	2 Recommendations Recommended By B.O. Plenty Kip S Read Replies (1) \| Respond to of 34328

Bogle pushed the S&P 500 ETF. I believe his perspective was it did not matter whether portfolio draws came from divvies or capital appreciation. I think Buffett thinks the same. The problem with divvies at 4% is that higher divvies are more subject to reduction. No more “widows and orphans stocks” that can be presumed to continue the dividend. One might think one is taking a more conservative approach and forsaking the chance of larger gains, but that can be an illusion. It would be interesting if they did some Monte Carlo simulations assuming a portfolio of stocks paying relatively higher dividends to see how that would have worked for the retiree in the past. All that said, there is something comforting about an apparently stable dividend stream when in retirement. Less stressful.

To: E_K_S who wrote (30432)	1/20/2019 7:16:56 PM
From: spindr00	1 Recommendation Recommended By geoffrey Wren Read Replies (3) \| Respond to of 34328

"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.