I need a serious logic check on my thinking. Thanks.
I flirted with a portfolio of 90% "high dividend yielding stocks. It seemed reasonable but I heard a comment today by Suze Orman on Today. She told a caller roughly, "right now CDs, treasuries, etc are so low in yield that a good dividend stock is a better choice for income production. Because, no matter what happens to the stock price you still get the dividend."
OK, yes, she is not a Bogle. But that attitude seems prevalent.
But doesn't investing in a dividend payer have additional risks.
1. Risk to NAV
2. Risk to reduction of dividend payout.
3. ** And if the NAV decreases then the yield "seems" to be "hhigh" but it needs to be factored by the reduction in NAV
Example
$100 initial value in VWxx yiedling 4.0% should produce $4.00 per year
But if the NAV drops by 20% then the $80 current value produces only $3.20.
So the dividend sounds great when advertised as 4% but it could be "net" 3.2%.
Would appreciate any comments that clear me up on this seeming contradiction to buying dividend stocks.
I flirted with a portfolio of 90% "high dividend yielding stocks. It seemed reasonable but I heard a comment today by Suze Orman on Today. She told a caller roughly, "right now CDs, treasuries, etc are so low in yield that a good dividend stock is a better choice for income production. Because, no matter what happens to the stock price you still get the dividend."
OK, yes, she is not a Bogle. But that attitude seems prevalent.
But doesn't investing in a dividend payer have additional risks.
1. Risk to NAV
2. Risk to reduction of dividend payout.
3. ** And if the NAV decreases then the yield "seems" to be "hhigh" but it needs to be factored by the reduction in NAV
Example
$100 initial value in VWxx yiedling 4.0% should produce $4.00 per year
But if the NAV drops by 20% then the $80 current value produces only $3.20.
So the dividend sounds great when advertised as 4% but it could be "net" 3.2%.
Would appreciate any comments that clear me up on this seeming contradiction to buying dividend stocks.