OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Mostly inaccurate, sorry to say.A few points.
Partially true. In many, probably most cases though, the dividend investor has skewed his portfolio to emphasize dividend-paying stocks or dividend-oriented funds. That is a portfolio strategy.(1) "Dividend investing" is not a portfolio strategy. It is a withdrawal strategy. Two people can have exactly the same portfolio and one person can choose to only withdraw dividends where as the other chooses to go with the 4% rule or some other withdrawal strategy.
No. Dividend decisions are made with a much longer view than "current data." Consistency of dividends amd steadily increasing dividends are highly valued by some investors. A cut or eliminated dividend is considered to reflect very negatively on the company. The safe route and the route commonly taken is to hold the dividend steady regardless of "current data" and to even borrow cash if necessary to make the payment.(2) Dividends are determined by the individual companies and are based on better data than the general public has access to. Dividends are based on current data and are adjusted up/down based on current data.
This is not tenable long-term of course, but companies these days are mostly run quarter-by-quarter and decision makers hold stock options. A passed or reduced dividend could cost them dearly. Better to kick the can down the road.
No again. An increasingly common way to return value to the shareholders is via stock buy-backs. This is the most tax-efficient method. It often stirs up controversy because the increased stock price benefits the C-suite dwellers' stock options and they are the ones making the buy-back decision. (In a more perfect world, options would be adjusted to reflect the effect of each buyback.) But, regardless, it is not at all true that every stock will eventually pay a dividend. If it were not the case that a large number of retail investors really do not understand the tax situation, most companies might actually stop paying dividends altogether. Only Uncle Sam would suffer.(4) Almost every stock will eventually pay a dividend because that is how companies distribute profits to shareholders. Complaining that it is not tax efficient will not change this fact. If a company never pays a dividend *ever* then it is no different than owning a piece of art or a collectible. You might as well invest in gold or baseball cards.