I know it's considered income on your AGI etc. but for me and maybe I'm unique in this. I view income as money that's repeatable. Once you sell an asset it's gone. You will never garner anything more money from it. So while yes on taxes it's income but to me it's a one time event that's not producing ever again.

So I look at them differently. Again maybe I'm unique in that sense.

As a young investor I was interested in dividends over total returns, however I've shifted to look at the longterm total return.

That being said, I still do appreciate dividend stocks when I can reinvest those dividends automatically in the stock. Especially if it's going to be a down market. And my thought process is that it helps me dollar cost average at a lower stock price, especially if they don't cut the dividend yield in a down market.

Back when I first started investing, every stock purchase came with a fee. So dividend reinvestment (DRIP) offered the advantage of buying more stock without paying that fee.

Lots of people here think you're doing it wrong if you don't do it their way. See the millionaires thread.

Brian Earl Spilner said:

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Yukon Cornelius said:

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You have to consider selling to create income isn't income. It's just liquidating assets. Which to me accumulating assets is a priority. Not selling them. So if you want income dividend are preferable because you don't have to sell any of your acquisitions

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Dividends and capital gains are both income. And both taxable. So, no net benefit.

Reinvested dividends feel like "accumulating", because you see your shares go up, which I understand psychologically. But it's no different from your standard capital gains in the end.

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If you sell stock for income, you eventually don't have any left to sell

Actually he isn't wrong.

Brian Earl Spilner said:

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Dumb. False equivalence.

If you sell the same amount as you'd otherwise get from dividends, nothing has changed.

If your compounding interest is not enough to more than offset whatever you're selling, your problem is the stock/ETF you're holding.

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No, your holdings have changed. With dividends, your holdings stay the same.

Compounding interest from stocks and ETF's is not interest. It's growth, and it's not guaranteed, especially on retirees' shorter time horizons. You're not selling off earnings or interest, you're selling off grown principle. Dividends provide a steady stream of income and less risk, which is why most people prefer them when they're on a shorter time horizon and can't make up lost growth of they have to sell down.

ABATTBQ11 said:

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Brian Earl Spilner said:

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Dumb. False equivalence.

If you sell the same amount as you'd otherwise get from dividends, nothing has changed.

If your compounding interest is not enough to more than offset whatever you're selling, your problem is the stock/ETF you're holding.

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No, your holdings have changed. With dividends, your holdings stay the same.

Compounding interest from stocks and ETF's is not interest. It's growth, and it's not guaranteed, especially on retirees' shorter time horizons. You're not selling off earnings or interest, you're selling off grown principle. Dividends provide a steady stream of income and less risk, which is why most people prefer them when they're on a shorter time horizon and can't make up lost growth of they have to sell down.

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Exactly. And calling people dumb is not helpful.

Damn, you've helped me so much. But you're showing your ass right now. Not cool

Aggie Dad 26 said:

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Damn, you've helped me so much. But you're showing your ass right now. Not cool

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Don't let him bother you, it was evident in his OP he had no clue about dividends, their meaning, or anything.

Personally, I've taken my dividends from EPD & ET to go on trips, help buy cars, help pay bills every now & then,, help pay school expenses, and be an emergency fund. All the while, my taxes haven't changed. My effective rate remains about the same, and the MLP's usually show an income loss that offset my gains elsewhere. Meanwhile, both my holdings have more than doubled & will continue to grow.

If you want an ETF that focuses on dividend growing companies, try MBOX. Created by my FA, it's doing great.

When did OP go from knowing nothing about dividends to being a CFA overnight?

Thanks for the laugh OP. It's clear you don't know much about Finance. Guessing you've never passed and never Will pass the 7, 66, or 24.

Anything else you'd like to teach us?

Google dividends and just start reading. Come back in a couple months and we can talk.

Because You know nothing from your posts which is ok from your OP but somewhere between then and now you must have stayed at a holiday inn or smoked some good herb because now not only are you an expert, you're talking down to those of us that actually worked or work in the industry and have ties older than you're.

Would highly highly encourage you to read intelligent investor. Hardback is hard to get but paperback and kindle are available. I think you have a bit of recency bias.

I'm thinking dividend stocks will see a slight premium due to declining bond sentiments and lowering rates for CDs/MMs.

Dividend stocks are not necessarily safe but I do think there is more stability in something like a dividend king versus normal single growth stocks. A thought out dividend portfolio is less volatile than a single stock one. Maybe just my perception though.

I am the furthest thing from a financial expert and am constantly asking myself this question as well. That being said, my understanding is that a dividend portfolio also has a big advantage when thinking about passing on stock upon death. Instead of eroding the base by selling over time and leaving a smaller wealth vehicle to pass on. Am I incorrect in this thinking?

The most effective strategy I have seen to have the largest consensus from my own limited research is to build growth in younger years and then transition to dividend over time when you retire. To my monkey brain this seems logical.

I am actually probably the exact person to ask this question to, simply because I am rather uneducated in this area and still look at both ways with equal weight with no set in biases. I know the earning potential of dividend vs growth is not debatable really. Growth wins that 99/100. But there is something that is VERY appealing to the set and DRIP and forget all the way up to the grave. Passive investing is not just a strategy IMO, but an actual way of living and overall mindset. There is something to that for a lot of people. I see both sides and how it appeals to those sides.

This is another conversation though that I don't think has a right answer in the end. Just a right fit for individuals and their needs and wants. Can't force someone to love mustard on their burgers over ketchup when we all know mustard is the obvious superior choice, ya know?

Brian Earl Spilner said:

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Thanks for actually providing a response rather than simply attacking me.

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Bro, you started a thread to argue, called people dumb, then gaslit them when they defended their arguments, and kept pouring gas on the fire to play the victim.

People aren't attacking you - you came here for a fight, and kept poking until you got it.