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Dividend yields are irrelevant because they are part of the withdrawal rate and hence the withdrawal amount .
If you are drawing 40k from a million dollar portfolio how much is interest , dividends , rmds or appreciation is irrelevant… it can all come from appreciation and it wouldn’t matter or change a thing .
All that matters is totaled up it doesn’t exceed 40k first year..that is because total return doesn’t care how it is made up …it’s all the same whether dividends , appreciation or a combo of the two.
It’s total return and total withdrawals that determine things as well as sequences and inflation
For such a simple concept few actually seem to grasp it so it just won’t die
I know total returns are the only thing that matters whether dividends are paid out or not is irrelevant - I think this has been clarified even if a large number of people DO NOT believe this and think dividends are somehow "extra" free money.
What I am clarifying is something else entirely - i.e. in the 70s what was the source of the dividends. Since those payouts can come from debt or profits. In the 70s robust wage growth perhaps drove profitability, today we are not sure if this wage growth will materialize and can the question is whether inflation can stick around without wage growth since that will drive demand destruction and less profitability.
Fact or Myth: High Dividend paying stocks have outperformed their non-dividend paying peers? I think this is FALSE. There are so many pro Dividend YouTube videos out there, the dividend investing thing has essentially become a craze right now. It is only here that we discussed the reality of this phenomenon.
This video makes nonsensical statements - more knowledge is required to sell shares? Why? You can just sell the same proportion of shares to generate income, in fact you can control the timing of the sale to suit your cashflow needs which makes dividend investing and the forced sale that comes with it to be a poor choice.
Fact or Myth: High Dividend paying stocks have outperformed their non-dividend paying peers?
Well, I certainly wouldn't base my investing on some random YouTube video. However...
There are a number of studies that found dividend payers, or at least dividend payers with certain characteristics, to have had higher returns than non-dividend payers. Here's one from JP Morgan:
Stocks are really going to be based on individual situations….I wouldn’t generalize anymore about any one type having better returns .
But in either case it’s still going to be about total returns.
In fact at this point I don’t want to own individual stocks as a core investment….I much prefer diversified funds and eliminating individual company risk
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