Why don't you invest in dividend stock?

Need_TLC
Need_TLC

why don't you invest in dividend stock?

are you financially suicidal?

Other urls found in this thread:

nasdaq.com/article/how-will-rising-interest-rates-impact-dividend-stocks-cm341670
msci.com/dividend-yield-factor
fool.com/investing/general/2015/10/03/how-will-rising-interest-rates-affect-your-dividen.aspx
mega.nz/#F!DpAz2IgQ!nW7bPNnpJFk5CAV3ypiaHw
youtube.com/watch?v=dQw4w9WgXcQ

Crazy_Nice
Crazy_Nice

Growth stocks have outperformed dividends for awhile now grandpa.

viagrandad
viagrandad

Seriously, this post-2008 reach for yield is so fucked up.

takes2long
takes2long

Because I rather get 100% returns on penny's stocks

Inmate
Inmate

I invest in index funds. Is that a meme here too or am I good?

likme
likme

If you're young just growth invest

Playboyize
Playboyize

Because I'm not a dumb good goy that wants to pay extra taxes to Uncle Sam.

Gigastrength
Gigastrength

I invest in index funds. Is that a meme here too or am I good?
They don't double every four days, so Veeky Forums can't into index funds.

Buy yeah, you're good.

Methshot
Methshot

2017
still having to pull this from the archive every week

OUTSIDE a tax-advantaged account, a dividend stock will lose out to a growth stock over time because the dividends are taxable as long-term capital gains. This eats into your investment capital, and saps your compounding.

Consider two equivalent stocks -- a growth stock (Stock G) and a high-dividend stock (Stock D) -- both of which yield 10% per year. Stock G earns its 10% by price accumulation alone, and Stock D earns its 10% by paying a 10% cash dividend. You own 1 share of each, and they are both worth $100/share. At the start, therefore, both Stock G and Stock D are worth $100.

At the end of 1 year, Stock G is now worth $110 (10% growth), and Stock D is still worth $100 but has paid you a $10 dividend which you re-invest. Your return on both stocks is the same -- before taxes. After taxes, however, Stock G is still worth $110 (no tax consequences) but Stock D has only returned you $108 because you paid 20% in capital gains taxes on the dividends. (I'm using 20% to keep the math simple in this example, but the principle is the same for any tax rate.) So after one year, Stock G is ahead by $2.

After year two, Stock G is now worth $121 ($110 x 10%), and stock D is worth $108 ($100 original + $8 reinvested) but has paid you a $10.80 dividend, reduced by taxes to $8.64, for a total gain of $116.64. Stock G is now ahead by $4.36

Hopefully you can now see where this is going. Every year the spread between Stock G and Stock D is going to get wider and wider because taxes aren't depleting any of your Stock G capital.

INSIDE a tax-advantaged account, you don't suffer the tax hit when dividends are declared. You get to reinvest the full amount. Therefore, inside a tax-advantaged account, growth and distributions both add EQUALLY to your growth and your compounding. So what you should be focused on is maximizing your overall return (growth PLUS dividends) instead of focusing on one or the other.

Flameblow
Flameblow

Buy ORC

Thank me later.

JunkTop
JunkTop

consistent quarterly operating losses
huge losses on CF from Inv.
very low ROA & ROE
2000% payout ratio (company literally paying out 20x it's bottom line in div.)

Please share whatever information you may have to make this huge pile of musty dog shit turn into a nice shiny rose-smelling cat turd.

Nojokur
Nojokur

Not sure if troll, or just stupid

Booteefool
Booteefool

sounds like you've already made your decision. Its a REIT it HAS to pay 90% of it's income to shareholders. They are going to be selling $125 million worth of shares. yes yes i know dilution but that $125m will be put to use in investments.

Its a big dividend payer with a decent float for now I've been trading it for about 3 years and have been making money on these dips. Feel free to walk away, i don't give a shit.

likme
likme

I've been trading it for about 3 years

Can you post your trade history, please? Real quick. Just for that ticker.

Deadlyinx
Deadlyinx

It's a REIT it HAS to pay 90% of it's income to shareholders

Then why not actually pay 90% of it's income instead of 2,000%? I'm aware that usually payout ratios don't matter for REITs but it's a little odd. Can you pop holes in my other arguments? Huge inv. losses on the CF statements? Consistent Q/Q operating losses? Missed earnings?

PackManBrainlure
PackManBrainlure

If he bought 3 years ago then he's underwater by a fair amount. Hear's the all-time chart.

Firespawn
Firespawn

like i said, i don't give a shit if you buy it or not.

implying i just bought once and held

TalkBomber
TalkBomber

You realize he could have bought in at like 10.25 and gotten 3 years at 16% yield according to that chart. Maybe not market beating but it's totally possible for that chart to be profitable.

SniperWish
SniperWish

these people don't understand how dividend investing works. They are the ones that run when a dividend gets cut rather than scooping up the oversold stock.

Trick to playing dividend stocks is to realize people are chasing dividends... then play off the dividend chasers.

LuckyDusty
LuckyDusty

I do realize that, I simply stated that if bought and held 3 years ago then he'd currently be in the red on that trade. I didn't mean anything more than what I said.

Why are you trying to pump a REIT that you have no skin in? These are classic Veeky Forums-isms for "i don't actually own the stock":
i don't care if you buy it or not
why should I show you my trade history?
I bought at the absolute bottom and sold at the absolute top
more deflective lies

AwesomeTucker
AwesomeTucker

I have it for income........ i thought this was a dividend stock thread..??

I didn't realize i was in a "lets look for some shit penny stock and meme it up cause YOLO"

Illusionz
Illusionz

It's just a variant of the oil & gas trusts that payout 40% while declining in price by 60% annually. They literally cannibalize themselves to make unsupportable distributions.

Meanwhile suckers like buy this garbage because they're so mesmerized by the checks that they don't even see their net investment value plunge. Paying $100 for $80 in income is stupid, but there's plenty of stupid people in the markets.

Stark_Naked
Stark_Naked

most oil trusts expire.
Stop being such a newfag.

Once again, i've been buying and selling it i don't fucking buy a dividend stock and just hold it without active management of that position.

plenty of stupid people in the markets.
including you. You sound like a DRYS fanboy.

Inmate
Inmate

i've been buying and selling it
If you've buying it and selling it capture movements based on the dividend payments, you're just as big an idiot as I thought. Study after study proves there's zero arbitrage available in dividend capture strategies. The markets are mercilessly efficient when the information (eg., dividend payments) are publicly announced.

You haven't made a dime on this stock. Period.

Techpill
Techpill

he markets are mercilessly efficient when the information (eg., dividend payments) are publicly announced.
Be fearful when people are greedy, be greedy when people are fearful.
Thats when you buy a large chunck and sell off into strength.

you are a complete idiot and you will lose money in the market. Screen cap this post and save it and look at in 2 years and realize you are the one that always sells out of fear and falls victim to wall streets manipulation.

Keep an eye on the stock and watch from the sidelines with your hands down your pants and your thumb in your mouth while the big boys make the money playing the game.

Emberfire
Emberfire

Be fearful when people are greedy, be greedy when people are fearful.
Repeating homespun homilies from the Farmer's Almanac isn't going to put profit in your account, bud. If you want to make money, you need to follow a winning strategy, not parrot grade school advice.

Dividend capture strategies do not work.

Ex-dividend price behavior of common stocks, JH Boyd, R Jagannathan - Review of Financial Studies, 1994

"In a variety of tests, marginal price drop is not significantly different from the dividend amount. Thus, over the last several decades, one-for-one marginal price drop has been an excellent (average) rule of thumb."

RavySnake
RavySnake

No offense but at first I just thought you were stupid but now I'm convinced you're a child who has zero real dollars in the markets. You're literally spouting memes and soundbites you've heard on mainstream finance news networks while trying to sell us on your swing trading dividend-based pricing arbitrage theory for a REIT with a beta at 0.3 that's paying out 200x it's net income every dividend. Surely even you, an uneducated child, can see that such behavior isn't sustainable for any fund/trust?

AwesomeTucker
AwesomeTucker

EVERYONE knows that advice

Useless

BunnyJinx
BunnyJinx

don't care anymore kid. Im making money on it and thats all that matters. I have plenty of other dividend stocks in my portfolio just thought id point out that it's a good time to buy ORC right now i won't be holding the stock forever, im just in it to make money not to become emotionally attached to the company that doesn't even know who i am. I just thought i would give a good dividend stock tip in a dividend thread i thought thats what this thread was about? instead your sperg lord fedora tipping ass has to come around and talk shit because you yourself make no money at all in the stock market with your little $50 robinhood account. Go jerk off before mommy comes home to make dinner.

New_Cliche
New_Cliche

Also, lol at "while the big boys make the money playing the game." You're describing a value-based price capturing strategy for a fucking $10 REIT man. You should really ease up watching that copy of Wolf of WallStreet that mom bought you for christmas last year, it's going to warp your perception of how finance really works.

Nojokur
Nojokur

i really don't care about what day i buy it on. as long as i am in at the right price. I never said i was going to buy the day before ex dividend day. how about you read the thread.

Dreamworx
Dreamworx

you yourself make no money at all in the stock market with your little $50 robinhood account

I feel ashamed but I've been hoping you'd say something along those lines. How about this, I'll show you mine and you show us yours?

Lunatick
Lunatick

paper account
lol

Garbage Can Lid
Garbage Can Lid

You already said that you buy/sell, so we know you're timing the stock in one manner or another. Either you're trying to strip the dividend, or you're trying to front or back run it. Either method is a loser, since the price movements match the dividend payment. This isn't my opinion -- it's the conclusion of an academic study looking at thousands of stocks over decades.

Not to mention, as other user pointed out, your playing momentum timing games with a sinking ship. Every day you own this pig you have a negative expected return. Stick your dick in a fire enough times and you're gonna singe the tip, bud, no matter how small your wiener is.

Crazy_Nice
Crazy_Nice

if thats all your net worth and you are "showing it off" i feel bad for you.

Spamalot
Spamalot

Guys, yGKfBf14 is clearly uncomfortable being called out on his bullshit. Let's direct him to stick to target date funds (since we've now confirmed he got BTFO on REITs) and find a job at a car dealership.

Now,
do you see dividend stocks making a comeback now that interest rates are rising again and drawing some of that yield hunter money back into bonds?

Soft_member
Soft_member

It's just my fuck-around day-trading account. But by all means, since you feel bad for my sorry portfolio let's see yours mate!

girlDog
girlDog

i enjoy the optimisim in this thread. you are all sure to make money in the stock market this summer now that you are all out of high school and know everything.

askme
askme

Here's a few articles on that subject, do some DD and decide.

nasdaq.com/article/how-will-rising-interest-rates-impact-dividend-stocks-cm341670
msci.com/dividend-yield-factor
fool.com/investing/general/2015/10/03/how-will-rising-interest-rates-affect-your-dividen.aspx

idontknow
idontknow

do you see dividend stocks making a comeback
I don't think there are many good dividend stocks out there to hold forever. Most of the time they decay. With rising interest rates buy fixed income preferred ETFs if you are looking for some type of income

don't listen to alot of trolls in here. making money with dividend stocks is very very possible and many people do it all the time, just don't let the dividend get in your way of making the right decision of when to get in and out of a trade.

likme
likme

do you see dividend stocks making a comeback now that interest rates are rising again and drawing some of that yield hunter money back into bonds?
If anything its going to be the opposite of a comeback. Dividend stocks have been artificially inflated for some time as conservative investors chase the yields that weren't there in bonds. Now that interest rates are on their way to normalizing, bonds become a more attractive alternative.

That being said, I don't believe that anyone under the age of 60 should be considering dividend stocks as an investment strategy. You shouldn't need the income during your earning years, and tax penalty is too severe outside a tax advantaged account. Is there anything wrong with owning SOME dividend payers INSIDE your 401k/IRA? No, nothing wrong. I do it and so do most people. But there's no evidence that over-weighting into dividend stocks is going to help you grow your net worth -- which should be your goal pre-retirement.

TalkBomber
TalkBomber

kek

CouchChiller
CouchChiller

fixed income preferred ETFs

That's not a thing though? There's preferred stock ETFs and there's also fixed income ETFs but not fixed income preferred ETFs. Do you understand why that is?

Also, an actual bond portfolio would much better suit someone (assuming enough capital) than adding more exposure to risk through any sort of tracking ETF. You should really wait until you finish Uni before you start attempting to give financial advice to others man. I'm not trying to be a dickhead but about 99% of people who actually participate in the markets can see right through your posts based on your phrasing, half-baked advice, etc.

Boy_vs_Girl
Boy_vs_Girl

Even though yGKfBf14 is a child feeling the need to validate his decisions - what is wrong with having some dividend stocks?

Soft_member
Soft_member

sorry i moved past that part and didnt give a fuck to go back and proof read.

Im not in college anymore, I started making more money in my stock trading and my rental propertys than i did with my job and quit school and work. Then I got in touch with other investors that introduced me to CEOs of companys to help finance their companys and take them public aswell as purchasing convertable notes that not every average joe can buy. I know alot more than you would think about finance and if you think my whole portfolio is riding on dividends you are a fool. They are a part of my portfolio as well as they should be a part of many peoples portfolio. I came in here to point out a quick buck. Please tell me. what do you suggest is a good investment right now?

Bidwell
Bidwell

Why not both?
NNA paid out 7% in half a year, during which time it also rose 50% in value.

likme
likme

fpbp

Skullbone
Skullbone

I feel like I read somewhere that stocks that have increased their dividends for like 5-10 consecutive years outperform most indexes.

I've personally been choosing some 'defensive' stocks like Wal Mart in anticipation of a pull back in the next couple years and building some positions in oil companies that are beat up. Probably hold all that for the next 20-30 years.

eGremlin
eGremlin

what is wrong with having some dividend stocks?
There's nothing wrong with dividend stocks IF they fit your financial goals and needs.

If you're a 68 year-old retiree who needs some steady, reliable income to help pay your bills, then dividend investing can serve you well.

But if you're a 24 year-old able-bodied adult, then you should be focused on growing your net worth so you have have a better live and a better future. Dividend stocks don't grow as fast as growth stocks outside of a 401k/IRA for the reasons described in . And even inside a 401k/IRA, they don't necessarily grow any faster than other equities. So while maybe owning some dividend stocks inside your tax-advantaged stocks would be ok, you wouldn't want to make this a focus of your investment strategy. It's just probably not a good fit for your goals or needs.

I feel like I read somewhere that stocks that have increased their dividends for like 5-10 consecutive years outperform most indexes.
There's some evidence, true, but it's skewed by survivorship bias. Look at any group of stocks with a history of positive metrics, and there's a decent likelihood that they're long term winners. Until they're not. There's nothing magical about paying dividends that makes a stock more likely to be better or worse than other equities.

That's why I say it's ok to own some dividend stocks IF you're buying for the long-term and IF you put them in a tax-advantaged account to negate their tax drag.

Fuzzy_Logic
Fuzzy_Logic

Nothing

Ignoramus
Ignoramus

So much

Harmless_Venom
Harmless_Venom

wow this is an awful fucking portfolio

Sir_Gallonhead
Sir_Gallonhead

it's better for some companies to keep that cash in retained earnings rather than distributions through dividends. they can grow faster without the dividends

MPmaster
MPmaster

Uh, I don't know how to tell you this, but derivatives are not dividends.

Also your ZeroHedge hyperventilation is incredibly wrong.

farquit
farquit

Dividend vs stock buyback vs cash is a hot topic these days. I don't remember this being a big deal since I've been investing (only like 2005 til now).

kizzmybutt
kizzmybutt

Look for more money to go towards retained earnings once rates get up off the floor. Time value of money has almost been temporarily suspended with rates being near-zero for so long but now that ST investment vehicles will be more attractive with higher rates of interest attached then I'd expect to see companies putting more cash to work in the ST-inv section and Equiv. section of their balance sheet.

Stock buybacks have caused some issues that we won't have to deal with for a few more years but it isn't good for executive pay to be linked to a firm's stock price when said executive has the ability to artificially raise their firm's stock price through a buyback program. I look for this to be improved upon in the coming years. Also, Trump's tax plan should make holding mountains of cash (looking at you AAPL) less attractive.

It's a daytrading portfolio that I use to play around. It's not properly allocated and position sizes aren't adjusted for level of risk. I'm aware that it's not the best.

StrangeWizard
StrangeWizard

I don't remember this being a big deal since I've been investing (only like 2005 til now).
Companies of all sorts have been stockpiling cash ever since the wave of defensiveness that rose in the wake of the 2008 crash. In the past, for the most part, companies couldn't hold on to cash without shareholders putting pressure on management. But ever since 2008, it became acceptable to build a war chest.

I think that's why you're seeing these debates with such fervor and frequency in recent years. 2008 was nine years ago. The crash is becoming a distant memory, and credit is cheap and easy again. Shareholders want those war chests to be spent: whether internally, on acquisitions, on buybacks, or as dividends.

Sharpcharm
Sharpcharm

A dividend cut is nothing to sneeze at. You don't cut your dividend unless you're in deep shit. Don't just assume it's "oversold."

ZeroReborn
ZeroReborn

That chart.
Think of where I'm sitting at only 33.
Pic related doesn't even include my pension account.

Goddamn retirement is going to be sweet.

Boy_vs_Girl
Boy_vs_Girl

implying i just bought once and held

everyone here knows that's EXACTLY what you did

askme
askme

this is just theoretical fantasy

in the real world the government taxes it first and the broker charges a fee before it is reinvested

this

Nude_Bikergirl
Nude_Bikergirl

How to get good like u

Techpill
Techpill

Honestly I've got nothing you haven't heard before. I make good money (started with $53k in 2007 and up to 100k today with healthy bonuses/OT).

Start early and make it big: I've contributed 15% of my base salary to my 401(k) since day one. I only work for companies with solid matching and pension benefits. I opened a Roth IRA in 2013 and max that out too. I opened an HSA in 2015 and put in about $3k per year and haven't had to use it. I never buy, sell, or otherwise trade based on where the market is going or what I think it will do. DESU praying for another 50% crash so I can get cheaper shares.

Sometime a couple years ago I realized that investing in stocks is a fool's game. Over the years I won some and I lost some, but I'm not smart enough to run with the big dogs. I now maintain a portfolio of 60% domestic, 20% foreign, 10% emerging markets, and 10% alternatives (REITs). I sip the ultra-low cost ETF kool-aid and no ragrets. I also have been in 100% equities and no plans to get more conservative anytime soon. When I change jobs I roll over my 401(k) to my IRA because it's cheaper and has more variety.

I have a nice house in the suburbs and drive a 10 year old crossover SUV (got that student loan payment tho). Married with 2 kids. One income. Don't do a lot of expensive travelling and cook most meals at home. Live somewhat frugally and find a woman who supports your financial goals and doesn't like to spend.

And that's all I have to say about that.

CodeBuns
CodeBuns

to run with the big dogs.

I bet you hire babysitters and just wait in the house until it's dark so you can try and give them shoulder massages

happy_sad
happy_sad

not doubling every 3 hours for all eternity
why even become a stock in the first place

lostmypassword
lostmypassword

Nice work senpai. 27 here. Going strong for early retirement.

BinaryMan
BinaryMan

OUTSIDE a tax-advantaged account
There is a difference for sure, but it is less than advertised in your post.

If you bought for $100 and you sell for $121 you have to pay capital gains tax on the difference, so you're only left with 116.80 for an actual advantage of +$0.16 after two years. Maybe it's different in the US, but that's the way it goes in my country.

So the for growth stock we have
pros
Zero effort, slightly better growth assuming constant re-investment, zero transaction fees (which under a certain investment threshold will impact your profits far more than the compounding or tax issues).
cons
Zero cashflow, no chance of shifting your focus without liquidating (with dividends you can invest into other stuff if an opportunity arises).

Growth stock and dividend stock are also indicative of different kinds of companies, business models and shareholder value strategies. Dividend stock is usually focussed on steady long-term cashflow since cutting dividens would be an awful signal, while growth stock has more volatility in the ROI. They both have their place. One isn't strictly better than the other on a conceptual level and it's probably prudent to have both in your portfolio.

Ignoramus
Ignoramus

he doesnt get in pre ipo.

Have fun with your wattered down investments cuck...

Fried_Sushi
Fried_Sushi

There is a difference for sure, but it is less than advertised in your post.
True, the example is simplified for sake of expediency. However, there's no assurance that capital gains tax is going to be paid on Stock G. There are many scenarios where and tax strategies where that bill never comes due. Also, paying taxes in the future is (almost always) better than paying now. Once you discount the future payment of taxes to present dollars, its going to reduce the bill even further.

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