Mathjak107, what you are saying is
1. Some people say dividends from stocks are like interest payments from bonds, and you disagree
2. Even when you are in the withdrawal phase, dividends should not be withdrawn and must be reinvested.
3. You have first hand experience with a REIT that kept a high dividend by returning capital without proper disclosure
It’s probably fair to say everyone here agrees on the first point. The third is regrettable. Stocks and REITS must comply with reporting requirements and disclosures and the financial statements show whether the business is generating enough earnings and cash to satisfy the dividend or not. This shows the importance of due diligence and portfolio diversification.
The second point is not intuitive. The withdrawal phase means your portfolio provides you with money to live. If you don’t need the income and have some other source to meet your needs then I can see why you advocate reinvesting. Most people need the income from their portfolios, however, and dividends are one way to provide that.
Finally, the literature that has been referenced here shows that your experience with REITS is possible but the more likely case is that dividend income rises over time faster than inflation and can be a real benefit to an investor in the withdrawal phase.
1. Some people say dividends from stocks are like interest payments from bonds, and you disagree
2. Even when you are in the withdrawal phase, dividends should not be withdrawn and must be reinvested.
3. You have first hand experience with a REIT that kept a high dividend by returning capital without proper disclosure
It’s probably fair to say everyone here agrees on the first point. The third is regrettable. Stocks and REITS must comply with reporting requirements and disclosures and the financial statements show whether the business is generating enough earnings and cash to satisfy the dividend or not. This shows the importance of due diligence and portfolio diversification.
The second point is not intuitive. The withdrawal phase means your portfolio provides you with money to live. If you don’t need the income and have some other source to meet your needs then I can see why you advocate reinvesting. Most people need the income from their portfolios, however, and dividends are one way to provide that.
Finally, the literature that has been referenced here shows that your experience with REITS is possible but the more likely case is that dividend income rises over time faster than inflation and can be a real benefit to an investor in the withdrawal phase.