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Old 05-24-2021, 01:31 PM   #41
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Originally Posted by olyveoil View Post
Much more productive conversations occur when one party (you) does not assume what the other party believes (me) and then tries to apply it to the debate with zero evidence (you).
Not really worth anyone's time to post things like "sigh" (you) in a forum where investing philosophies are being discussed.

Obvious things to me:
"Dividends" do seem to trigger some emotive replies here. Not sure why.
"Dividends" also seems to bring out passive-aggressive / feelings of intellectual superiority out of people here. Not sure why.

To the OP, I agree with an income portion of your portfolio being dividend focused. Some less common things to consider are:
BDC's
Covered call ETF's
Sigh....you are new here....we are mostly "set it/forget it" investors. We are (most of us) retired and have "enough" and prefer to use our time doing things that are fun (like go on vacation, take trips, play pickle ball, fish, garden, etc). That's why we retired.
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Old 05-24-2021, 01:35 PM   #42
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Quote:
Originally Posted by olyveoil View Post
...
Obvious things to me:
"Dividends" do seem to trigger some emotive replies here. Not sure why. ...
The antidote (*not* "antecdote") to emotive replies is data.

Got some?

-ERD50
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Old 05-24-2021, 01:45 PM   #43
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Originally Posted by aja8888 View Post
Sigh....you are new here....we are mostly "set it/forget it" investors. We are (most of us) retired and have "enough" and prefer to use our time doing things that are fun (like go on vacation, take trips, play pickle ball, fish, garden, etc). That's why we retired.
So what if I'm new here?
What about my posts are not relevant to the OP?
Just because most are set and forget types precludes discussion about dividend investing? If you don't agree, just say so. Why be dismissive or passive-aggressive childishness?

congrats on retirement.
Included with your pickle ball, vacations etc also includes replying to this forum.
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Old 05-24-2021, 01:46 PM   #44
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Originally Posted by ERD50 View Post
The antidote (*not* "antecdote") to emotive replies is data.

Got some?

-ERD50
One antidote is data, yes. Not the antidote.
What data would one be looking for? I am suggesting that a dividend stream is part of an investing strategy....not the investing strategy.

Where is the data stating otherwise?
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Old 05-24-2021, 02:30 PM   #45
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People keep asking for Data. Here is some data. I think the right comparison is 100% stocks for the dividend growth investor vs. 60/40 for the "total return" investor. I am 100% invested in dividend growth stocks and in the crash last year and the crash in 2009, my dividends hardly moved at all.

VYM (Vanguard High Dividend Yield Index)
10 yr: 12.04
5 yr: 11.40

SCHD (Schwab U.S. Dividend Equity ETF)
10 yr: NA
5 yr: 16.85

VTI (total Market)
10 Yr: 14.03
5 Yr: 17.68

AGG (Bonds)
10 Yr: 3.30
5 Yr: 3.12

60/40 VTI/AGG
10 Yr: 9.74
5 Yr: 11.86
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Old 05-24-2021, 02:43 PM   #46
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If there’s much more sighing we’ll have enough wind to sail a schooner.
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Old 05-24-2021, 02:47 PM   #47
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Quote:
Originally Posted by olyveoil View Post
So what if I'm new here?
What about my posts are not relevant to the OP?
Just because most are set and forget types precludes discussion about dividend investing? If you don't agree, just say so. Why be dismissive or passive-aggressive childishness?

congrats on retirement.
Included with your pickle ball, vacations etc also includes replying to this forum.
Heh, heh, you'll get used to it if you stick around for a while. Sometimes we sound like a tough crowd who is quite opinionated. Uh, I guess some of us are. You can toughen up and participate or shake the dust off your feet. I'm hoping for the former though YMMV.
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Old 05-24-2021, 02:53 PM   #48
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You can toughen up and participate or shake the dust off your feet.
Of course, there is another option, which is everyone can be more respectful and disagree without being disagreeable
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Old 05-24-2021, 02:59 PM   #49
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Of course, there is another option, which is everyone can be more respectful and disagree without being disagreeable
Yeah, that was gonna be my second option. Maybe I'm not as optimistic as you are. Hopeful - but not as optimistic. YMMV
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Old 05-24-2021, 04:11 PM   #50
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Originally Posted by olyveoil View Post
One antidote is data, yes. Not the antidote.
What data would one be looking for? I am suggesting that a dividend stream is part of an investing strategy....not the investing strategy.

Where is the data stating otherwise?
I've posted it many times, I will repeat it for you when I have time a little later, unless you search and find it before then.

-ERD50
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Old 05-24-2021, 04:16 PM   #51
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People keep asking for Data. Here is some data. I think the right comparison is 100% stocks for the dividend growth investor vs. 60/40 for the "total return" investor. ..
Some people think that, but the data says otherwise.

Those 100% div paying portfolios are *not* less volatile than VTI, so it isn't a fair comparison at all to weigh VTI down with bonds, and not the div payers. To make it apples/apples, you need to match up the volatility as best we can, then compare returns.

So your data clearly shows VTI to be the winner over those 5 and 10 year time frames.

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Old 05-24-2021, 04:19 PM   #52
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Originally Posted by olyveoil View Post
So what if I'm new here?
What about my posts are not relevant to the OP?
Just because most are set and forget types precludes discussion about dividend investing? If you don't agree, just say so. ...
Being new is fine. Maybe we can learn something we have missed before, I'm open to it, seeking it actually.

Quote:
Originally Posted by olyveoil View Post
...
Just because most are set and forget types precludes discussion about dividend investing? If you don't agree, just say so. ...
Not IMO, a discussion is fine. But the discussion should include (wait for it....), some relevant data.


-ERD50
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Old 05-24-2021, 04:20 PM   #53
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Some people think that, but the data says otherwise.

Those 100% div paying portfolios are *not* less volatile than VTI, so it isn't a fair comparison at all to weigh VTI down with bonds, and not the div payers. To make it apples/apples, you need to match up the volatility as best we can, then compare returns.

So your data clearly shows VTI to be the winner over those 5 and 10 year time frames.

-ERD50
You would need to be able to determine volatility of income. My stock portfolio dropped >50%, but my income didn't budge
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Old 05-24-2021, 07:13 PM   #54
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No expert, but I've always hated preferred stocks. The issuer has all the control. If interest rates go up, you are stuck as there is no fixed term like a bond that would help limit your downside risk. If interest rates go down, they can call and either re-issue or issue some bonds.



If the company gets in money trouble, preferred holders are in line after bond holders so preferred carries more default risk than bonds.



The fact that some of these are paying a lot and not being called, seems likely to be due to poor creditworthiness of the company. It's not like the corporate CFOs went to sleep and or said "let's not call these, we like paying more for money than we have to!"



So I think some of these are just junkier versions of junk bonds and buyers should be skeptical if the yield is terrific.


There is one preferred you would like but sadly not enough to get. BACRP. It was issued in early 1980s by Bank of America (actually a predecessor) as a 7% cumulative, noncallable, but owner can tender it back anytime they want at par $100. I snagged a 100 of them at $105 last month. I will never tender those.
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Old 05-24-2021, 07:19 PM   #55
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You would need to be able to determine volatility of income. My stock portfolio dropped >50%, but my income didn't budge
That's a mirage. Even DW (not interested in financial matters) now understands that money is a mushroom, or something like that ("fungible").

My data will show that, when I get it posted, hopefully soon, unless I get distracted.

-ERD50
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Old 05-24-2021, 07:54 PM   #56
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People keep asking for Data. Here is some data. I think the right comparison is 100% stocks for the dividend growth investor vs. 60/40 for the "total return" investor. I am 100% invested in dividend growth stocks and in the crash last year and the crash in 2009, my dividends hardly moved at all.

VYM (Vanguard High Dividend Yield Index)
10 yr: 12.04
5 yr: 11.40

SCHD (Schwab U.S. Dividend Equity ETF)
10 yr: NA
5 yr: 16.85

VTI (total Market)
10 Yr: 14.03
5 Yr: 17.68

AGG (Bonds)
10 Yr: 3.30
5 Yr: 3.12

60/40 VTI/AGG
10 Yr: 9.74
5 Yr: 11.86
Taking 4% withdrawal every year, a 93% VTI /7% BND gives the same standard deviation and lower maximum drawdown since 2007 (the life of the VYM data) as 100% VYM per Portfolio Visualizer.

Until the last couple of years, the 93% VTI/7% bond chart was practically an overlay of 100% VYM. In the last couple years, 93% VTI pulled away, so it ends with better Sharpe and Sortino Ratios and a higher final value. Other indices and other time frames may give a little different picture, but the main point is that dividend stocks were not very bond-like, they were very stock-like.

People need to understand that their portfolio risk may be much higher than they think if they have talked themselves into believing that dividend stocks behave like bonds.
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Old 05-24-2021, 08:03 PM   #57
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I've posted it many times, I will repeat it for you when I have time a little later, unless you search and find it before then.

-ERD50
Quote:
Originally Posted by qwerty3656 View Post
You would need to be able to determine volatility of income. My stock portfolio dropped >50%, but my income didn't budge
Quote:
Originally Posted by ERD50 View Post
That's a mirage. Even DW (not interested in financial matters) now understands that money is a mushroom, or something like that ("fungible").

My data will show that, when I get it posted, hopefully soon, unless I get distracted.

-ERD50
OK, putting together the data...

First, I covered some of this in this post, back in Feb, 2021:

https://www.early-retirement.org/for...ml#post2559319

Updated links, the first is VTI (Total US Market) versus a blend of 7 div-paying funds. Asset allocation of 100%, and an annual, inflation adjusted withdrawal of 3.5% (there's your income) :

Note: The time period was constrained by the available data for iShares International Select Div ETF (IDV) [Jul 2007 - Apr 2021].

https://bit.ly/3wvS11f

The portfolio of VTI went from $1,000,000 initial investment to $2,224,170.
The portfolio of div-payers ended up at $1,630,526.

So the div-paying funds are down $593,644, after both portfolios provided an inflation adjusted 3.5% WR. And the VTI portfolio would have saved you some taxes to boot.

Look at that link. At the Feb 2009 trough, VTI held up better than the div payers. And again in the Jan-March 2020 drop, VTI held up better percentage-wise. And as you can see, VTI was already up considerably, so having a less deep correction is icing on the cake. All while providing 3.5% inflation adjusted withdrawals (income).

Now, to dig a bit deeper, you might notice that despite almost always leading the div payers, VTI is shown to have a slightly higher standard deviation (being higher means it can fall further, but still be ahead). So OK, to be picky let's factor that out by adding 10% bonds to VTI, which lowers standard dev - of course VTI is still way ahead (by $521,082), while providing the same income.

https://bit.ly/3oOGyaI

Portfolio 1 (Blue) is VTI:
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Old 05-24-2021, 09:49 PM   #58
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Source: Morningstar/Hartford Funds, 02/2020. S&P 500 Index is a market capitalisation weighted price index composed of 500 widely held shares. *Total return for the S&P 500 Index was negative for the 2000s. Dividends provided a 1.8% annualised return over the decade.

Interesting to note that the lower the total returns are by decade the greater the importance of dividends on total return. This could be especially important for retirees if there is a repeat of the 2000s decade where there wasn’t a positive return.

The best information I’ve come across regarding dividends and their impact on total returns is here:

https://www.hartfordfunds.com/dam/en...pers/WP106.pdf

There is some comparisons of dividend paying stocks verses the S&P 500 weighted index regarding total returns and beta. (See Figure 7 on Page 6 of this report)

I thought this information was relevant to this discussion.
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Old 05-24-2021, 09:53 PM   #59
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Originally Posted by olyveoil View Post
Obvious things to me:
"Dividends" do seem to trigger some emotive replies here. Not sure why.

I agree 100%. There seems to be a cadre of people that have an emotional attachment to dividend-paying stocks. I am not sure why. I am glad that someone else has noticed this!
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Old 05-25-2021, 05:33 AM   #60
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The examples given are how holding total market plus 7-10% bonds blows away dividend growth investing. Nobody holds 7-10% bonds [after they retire].
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