Art G
Thinks s/he gets paid by the post
- Joined
- Nov 5, 2007
- Messages
- 1,052
If you buy ETF's or funds that produce dividend income you will be sheltered from the fall in the market much more than growth stocks. Dividend paying stocks historically do much better than growth stocks during recessions and during the Great Depression were most likely to survive. Your argument doesn't hold water.
Additionally, you should get some tax preference off the dividends. If you could survive on the dividend stream at the start of a recession you should be comfortable throughout.
Recessionary pressure actually reduces prices so the CPI should remain stagnant or decrease so inflation won’t be a killer.
Good quality stocks that pay dividends form streams of income are much less likely to fold than stocks that are priced based on future growth. Which stocks do you think will get hit the hardest?
Cherry picking companies for comparison like GM does not water down the fact that dividend stocks produce in recessions. Historically, they hold up better and rebound faster. Your facts are wrong.
The key is to hold a broad based fund of dividend paying stocks and keep to your desired asset allocation based on your risk tolerance.
If you have cash, are not retired, and are not worried about losing your job, now is the time to get dividend paying stocks because they are paying great dividends.
That's just lovely, so what you're saying is if you have cash after the market tanks, you'll have money to invest. Wonderful. Now how many retirees do you think are sitting on cash that they don't need to live on? How many of those with cash feel they can risk jumping into the market even though it may eventually be a bargain because they're much more concerned about the market falling further?
I cherry picked great quality companies just a year or two ago. By cherry picking GM from my list of four, I'd say you were equally cherry picking. GE was one of only 8 AAA companies in the world! I can list dozens of other "quality companies" that have recently cut dividends.
There's a huge difference between comparing people who are still working and saving vs. those already in retirement and on fixed income, and I thought those were the ones we were discussing?
BTW, I could surely use that list of ETF's that haven't dropped and are paying good dividends. Thanks.