Dividend ETFs

I use dividend funds for diversification. The makeup of dividends funds is very different from a market cap SP500 fund. Using portfolio visualizer for the past 10 year period,
FXAIX (SP500 index) is 81.6% large cap, 17.8% mid cap, .54% small SCHD is 65.4% large cap, 28.3% mid cap, 6.29% small cap
NOBL (Dividend Arist) is 46.0% large cap, 51.2% mid, 2.80% small
 
My investments are in IRAs, I am 83, spouse 86. Dividend ETF are MAYBE 25% of a portfolio that includes bonds and stocks (basically S&P momentum style). Our horizon is much shorter than most.
 
Yes, I have heard your "money is fungible" argument ad nauseam. People have differing opinions and decisions on how to approach retirement income. Accept it and move on.

Flieger
It's not an argument, it's a fact. Money is fungible.

Certainly people can have different decisions on how to proceed, but a helpful discussion of those choices ought to consider the facts.
 
Where is this from?

I look at my 'income' tab at Schwab but it also includes some estimated cap gains as far as I can tell...
Not sure of the question? The program I use for this is Snowball Analytics. The graph is generated directly from the number of shares and the dividends "expected". All funds have either had flat or increasing Div's for at least the last 5 years, one of the criteria that I adhere to for almost all of my Income Portfolio. I say almost because I have varied from that a couple of times recently.

Flieger
 
It's not an argument, it's a fact. Money is fungible.

Certainly people can have different decisions on how to proceed, but a helpful discussion of those choices ought to consider the facts.
Ok, but money in the bank (or 401k, or IRA) is more fungible than a promise of money in the future (SS). One I can leave to my kids, one I can't. "I'll gladly pay you tomorrow for a hamburger today". Sometimes the seller doesn't get paid.

Flieger
 
Where is this from?

I look at my 'income' tab at Schwab but it also includes some estimated cap gains as far as I can tell...
TP, I believe the Schwab income forecaster uses only projected interest and dividends and excludes any attempt to project future CG's.


Edit: Just double checked on the Schwab site. Only divs and int are included in their income projection tool.

We calculate investment income from your current securities that generate dividends and interest.

Investment income includes:
Received income - money you've already received up to today that can be deposited in a bank account or reinvested in your portfolio.Estimated income - money you could potentially receive in the future, based on dividends and interest from securities you own now.

Investment income does not include:
Other forms of income from your portfolio such as capital gains.Zero-coupon bonds such as Treasury Bills nor variable rate bonds such as I-bonds
 
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It's not an argument, it's a fact. Money is fungible.

Certainly people can have different decisions on how to proceed, but a helpful discussion of those choices ought to consider the facts.
You and Flieger are both correct ERD50. You're pointing out that a dollar in hand can be used for any monetary purpose regardless of whether it came as a div, int, CG or picking the right horse at the track. I sure agree with that. Flieger is just pointing out that as he looks forward in time and anticipates income (FV of his current stash), he feels more confident in those dollars arriving as projected if they're from int and divs as opposed to CG's. That is, for a dollar to be there to be used for any monetary purpose (to be there to be fungible), it has to arrive as projected.
 
Not sure of the question? The program I use for this is Snowball Analytics. The graph is generated directly from the number of shares and the dividends "expected". All funds have either had flat or increasing Div's for at least the last 5 years, one of the criteria that I adhere to for almost all of my Income Portfolio. I say almost because I have varied from that a couple of times recently.

Flieger
You answered it... I was wondering where the graph was from....

Schwab has a similar graph for expected income but it includes expected cap gains so not only divis and interest..
 
You and Flieger are both correct ERD50. You're pointing out that a dollar in hand can be used for any monetary purpose regardless of whether it came as a div, int, CG or picking the right horse at the track. I sure agree with that. Flieger is just pointing out that as he looks forward in time and anticipates income (FV of his current stash), he feels more confident in those dollars arriving as projected if they're from int and divs as opposed to CG's. That is, for a dollar to be there to be used for any monetary purpose (to be there to be fungible), it has to arrive as projected.
Of course, for that div to arrive for monetary purpose, the NAV of the fund it comes from decreases.
 
You answered it... I was wondering where the graph was from....

Schwab has a similar graph for expected income but it includes expected cap gains so not only divis and interest..
No, Schwab doesn't include expected cap gains. See my post above.
 
Of course, for that div to arrive for monetary purpose, the NAV of the fund it comes from decreases.
Yes, in a relative sense. But depending on the other factors driving NAV, the NAV may increase
the day after a divy, just less than it would have otherwise.

I own a fund, PIMIX, that pays a monthly divy. Sometimes the NAV is up, sometimes down, sometimes the same following the divy payment. Since I don't know what the NAV would have been without the divy payment, I've given up on trying to understand what the divy payment does to the NAV.

I agree with what you're saying. I'm just adding that sometimes, depending on the fund, it's hard to see the divy causing a reduction in NAV consistently every month.
 
You and Flieger are both correct ERD50. You're pointing out that a dollar in hand can be used for any monetary purpose regardless of whether it came as a div, int, CG or picking the right horse at the track. I sure agree with that. Flieger is just pointing out that as he looks forward in time and anticipates income (FV of his current stash), he feels more confident in those dollars arriving as projected if they're from int and divs as opposed to CG's. That is, for a dollar to be there to be used for any monetary purpose (to be there to be fungible), it has to arrive as projected.
I don't see the difference between the income arriving because the fund issues a dividend (essentially a forced sale on the holder of the fund), or the holder selling as much as they need when they need it. It 'arrives' when I decide to sell.


Of course, for that div to arrive for monetary purpose, the NAV of the fund it comes from decreases.
Yes, in a relative sense. But depending on the other factors driving NAV, the NAV may increase
the day after a divy, just less than it would have otherwise. ... I'm just adding that sometimes, depending on the fund, it's hard to see the divy causing a reduction in NAV consistently every month.
Sure, it can get lost in the noise sometimes. But as I recall, someone studied this over many stocks and years, and was able to filter out the noise, and the results were as expected. Clearly, the money is debited from the fund/stock, and that has to be reflected in the stock price over the long term, or it would indeed be 'magic money'.
 
Yes, in a relative sense. But depending on the other factors driving NAV, the NAV may increase
the day after a divy, just less than it would have otherwise.

I own a fund, PIMIX, that pays a monthly divy. Sometimes the NAV is up, sometimes down, sometimes the same following the divy payment. Since I don't know what the NAV would have been without the divy payment, I've given up on trying to understand what the divy payment does to the NAV.

I agree with what you're saying. I'm just adding that sometimes, depending on the fund, it's hard to see the divy causing a reduction in NAV consistently every month.

Whether it's blatantly obvious or not, it is there, and the ratio of dividend to NAV is a mathematical certainty.

Dividends are never, ever bonus/free money.
 
I don't see the difference between the income arriving because the fund issues a dividend (essentially a forced sale on the holder of the fund), or the holder selling as much as they need when they need it.
That's because there is no difference, except potentially tax treatment. As an esteemed member of this board has noted on multiple occasions, "Math is hard."
:)
 
I used to think that Dividends were the way to go and invested heavily in SCHD early in my accumulation phase. But after discovering this forum and becoming much more educated I do think that total return is what really matters ... I load up on SCHG these days as I continue to both accumulate as well as spend down in RE.
SCHDvSCHG.png
 

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Whether it's blatantly obvious or not, it is there, and the ratio of dividend to NAV is a mathematical certainty.

Dividends are never, ever bonus/free money.
Thank goodness you're there mrfeh! Someone had to step and state the obvious............... Again. And again. And again...........
 
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No, Schwab doesn't include expected cap gains. See my post above.
OK>>>> I now see... I saw some big numbers on some of the MFs but just calculated it is the estimated yield that they have... so my 'income' will be a lot higher than I was expecting!!!
 
Thank goodness you're there mrfeh! Someone had to step and state the obvious............... Again. And again. And again...........
When so many people are fooled/confused about "dividend strategies", repeating the obvious is all one can do.
 
When so many people are fooled/confused about "dividend strategies", repeating the obvious is all one can do.
Maybe they are not fooled, just choosing a strategy that works for them? Live and let live.

Dividends are just one way that a company chooses to "return" funds to investors. I think everyone knows that if they chose that path, they reduce the reinvestment and some theoretical capital gain. One can choose many (and their own) paths. Sometimes even more than one.

Flieger
 
Maybe they are not fooled, just choosing a strategy that works for them? Live and let live.
Some people understand the pros/cons and make an informed choice.

Many others clearly do not understand.
 

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