Dividend investors only invest in companies that pay regular dividends. We believe you should be agnostic and invest in any company that will likely be a good investment – whether it pays dividends or not. Berkshire Hathaway has been a good investment because it doesn’t pay dividends. In this article, we explain why: retaining earnings…
It turns out history gives us some good clues about what is a good dividend yield. If you’re a dividend investor it certainly tells you where you should concentrate your investment research. While Treasury yields have gone down, many dividend investors have gravitated to invest in higher yielding stocks. But keep in mind that a…
Dividends vs retained earnings – what is best from a shareholders perspective? In this article, I discuss dividends vs. retained earnings and where the capital compounds best: in your hands or in the company’s hands. Distributions and subsequent reinvestments are an inefficient way of compounding! Given certain assumptions, it’s better to retain the earnings instead…
We believe it’s not a rational decision to focus solely on dividend stocks (or non-dividend stocks for that matter). Don’t invest only for dividends. I don’t think you should ever invest for income. It is a mistake…….. You shouldn’t just invest for dividends, you should invest in businesses that reinvest their profits to achieve a…
This article shows you how to calculate the dividend yield on your portfolio. It’s easy: You simply calculate the latest dividend payments of all your stocks and divide it by the current market value of your holdings. That’s it. It’s a task that should only take a few minutes. Dividend investing is popular Dividend investing…
How many dividend stocks should you own? Like most things in the world, everyone has their opinion on basically everything. Why would dividend stocks be any different? Most commonly asked questions while building a portfolio is over the number of how many dividend stocks you should own and the parameters over which their holdings should…
Can you lose money on dividend stocks? Can dividend stocks lose value? Quite an obvious answer to this question would be yes, you can lose money on dividend stocks – as is the case with any investment. Stock picking is difficult. DIY investors need to construct a properly diversified dividend portfolio and at the same…
Compounding dividends and DRIP investing are popular. That is understandable because dividends have been a significant contributor to long-term gains in the stock market. It’s essential that you reinvest dividends to get the returns of the market, but many investors mistakenly focus solely on dividend stocks because of this. But a company has many opportunities…
The marginal rate of return is the most important factor to compound efficiently. In the long run, your pension is more dependent on the marginal rate of return than the original investment. If you are into dividend investing, you really ought to study the marginal rate of return on your investments. We argue that dividend…
This is a very short article based on two much longer articles: Sell shares to create “income” The marginal rate of return/incremental return The case against DRIP and compounding dividends On the 30th of April 2020, Royal Dutch Shell cut their dividend by 67% (I have a tiny position in the stock – 0.05% of…
If you’re a dividend investor, did you know that you can sell shares to get the same “income”? A lot of investors swear to invest only in dividend stocks to get “income”. While I agree a dividend can serve as a useful heuristic in investing, a more rational approach would be to look at each…
How do taxes affect your compounding interest? To shelter your savings from taxation while building your nest egg is extremely important and you better understand taxes and compounding. I believe this is pretty obvious for most investors, but I suspect it’s still neglected because the headwind takes about ten years to really make a difference….
