Tell me about using Dividend Funds in retirement.

[dobig]

Don't get me wrong. I'll invest in growth oriented dividend etfs. But I'm going to do so in moderation.

I see no reason to swing for the fences when singles and doubles will get me to the finish line. If a person really feels that strongly about growth they're free to put it all on TQQQ and sit back and dream about that new 54' Viking they're going to get.

 

[Montecfo]

I think the most amazing thing about this thread is people assuming you must put ALL in dividend stocks or ALL in growth.

I really think the wise money is putting some in both. Plus some bonds.

It's a portfolio people.

 

[FD1000]

I think the most amazing thing about this thread is people assuming you must put ALL in dividend stocks or ALL in growth.

I really think the wise money is putting some in both. Plus some bonds.

It's a portfolio people.

It all depends on your goals and style.
If you want to buy and hold for the next 20-30 years, what would you do?
Do you want to own single companies? Buy the ones with the best potential to make you the most. Never start your research based on dividends.
Do you want lower volatility, start looking at typical bond funds.

The above is easy, but what if you want more.
Examples
1) How can you improve your portfolio risk-adjusted return=higher Sharpe ratio?
2) how to make money without losing high %, meet your goals, without insurance companies?
3) how can you invest in leading categories/ funds most times.
4) What does diversification mean? Owning 10 categories?
5) They say that taking more risk= more performance. Not necessarily.
6) How to do some of the above and spend min time?
Think 2 hours every 4 months for number 1, 3, 4, and 5.

 

[target2019]

Adding on to that. VTV is hardly “traditional” value based on its current PE (near 21x PE).

Further, usually we expect it to perform “better” in turmoil. This current volatility is certainly not a panacea of all future behavior. But value has dropped 3.95% (VTV) vs growth (VUG) dropped 0.82% over the past month.

This is not the safe lower volatility behavior you expect (yet any way).

VUG -7.72% YTD
VTV +3.29% YTD

VUG dropped -1.70% 1M
VTV dropped -4.30% 1M

 

[dobig]

I think the most amazing thing about this thread is people assuming you must put ALL in dividend stocks or ALL in growth.

I really think the wise money is putting some in both. Plus some bonds.

It's a portfolio people.

*shocking*

 

[TheQuestionGuy]

Worked on a withdraw strategy this weekend.
Wow, very close to the tax cutoff where it jumps from 12% to 24%.
Also plan to implement a 401k to Roth conversion each year too.

For those who have part of their portfolio in these Dividend Funds, do you monitor your income and if getting close to a higher tax bracket are you able to change from getting paid dividends to have that fund maybe reinvest the last quarter dividends then after the new year switch back again to getting paid?

 

[marko]

Worked on a withdraw strategy this weekend.
Wow, very close to the tax cutoff where it jumps from 12% to 24%.
Also plan to implement a 401k to Roth conversion each year too.

For those who have part of their portfolio in these Dividend Funds, do you monitor your income and if getting close to a higher tax bracket are you able to change from getting paid dividends to have that fund maybe reinvest the last quarter dividends then after the new year switch back again to getting paid?

If I understand your question, you're taxed on your dividends whether you're paid them or reinvested. Many of us keep our dividend payers inside an IRA.

 

[TheQuestionGuy]

If I understand your question, you're taxed on your dividends whether you're paid them or reinvested. Many of us keep our dividend payers inside an IRA.

Yes, the question is specifically related to having it a retirement related account.

 

[marko]

Yes, the question is specifically related to having it a retirement related account.

If it's in a retirement account there's no tax. I must be misunderstanding your question.

 

[VanWinkle]

Don't get me wrong. I'll invest in growth oriented dividend etfs. But I'm going to do so in moderation.

I see no reason to swing for the fences when singles and doubles will get me to the finish line. If a person really feels that strongly about growth they're free to put it all on TQQQ and sit back and dream about that new 54' Viking they're going to get.

I feel the same way with singles and doubles. At 71 I am still playing softball and not many homers happening at my age. Plenty of singles and doubles produce wins. Swinging for the fences all the time results in a lot of strikeouts.

 

[joejetski]

Don't get me wrong. I'll invest in growth oriented dividend etfs. But I'm going to do so in moderation.

I see no reason to swing for the fences when singles and doubles will get me to the finish line. If a person really feels that strongly about growth they're free to put it all on TQQQ and sit back and dream about that new 54' Viking they're going to get.

‘54 Viking, nice fishing platform. I fished a ‘60 Viking a few years ago in the White Marlin Open, OC MD.

 

[joejetski]

Worked on a withdraw strategy this weekend.
Wow, very close to the tax cutoff where it jumps from 12% to 24%.
Also plan to implement a 401k to Roth conversion each year too.

For those who have part of their portfolio in these Dividend Funds, do you monitor your income and if getting close to a higher tax bracket are you able to change from getting paid dividends to have that fund maybe reinvest the last quarter dividends then after the new year switch back again to getting paid?

I have my DIV/Growth (DIVO, IDVO, and SCHD) in my Roth. No plans to touch until I hit 75, 13 years from now.

 

[dobig]

I feel the same way with singles and doubles. At 71 I am still playing softball and not many homers happening at my age. Plenty of singles and doubles produce wins. Swinging for the fences all the time results in a lot of strikeouts.

Absolutely!

If someone had told me when I was young and living in a trailer park or later on in my teen years after Dad left leaving us destitute that one day I'd have almost $3 mil in investments in my 50's I'd have fallen over in shock and joy. I'm going for singles and doubles because I'm never going back.

 

[Lorenzo]

I think the most amazing thing about this thread is people assuming you must put ALL in dividend stocks or ALL in growth.

I really think the wise money is putting some in both. Plus some bonds.

It's a portfolio people.

I could not agree more, and it has been pointed out several times already that for many of us that assumption is not realistic. As I have said, I am open to shifting my retirement strategy to a more hybrid approach than the growth-skewed approach (70/25/5 stock/bond/cash, mostly in tIRA) I have been taking, which is why I continue to follow this thread and others on "income investing." What I would like to get a better grip on is how to decide what percentage to allocate to dividend stocks/funds along with "some bonds." And if so, what would be some good dividend funds. I'm a mostly hands-off kind of investor, happy to hit only singles and doubles, and SCHD sounds like a favorite of such investors. Current dividends from taxable and tIRA are nowhere near my spending needs, so I have little concern about losing control to too much income set on automatic.

 

[Qs Laptop]

So I bought some SCHD and it's in my taxable account. I've got it set up to reinvest dividends. I understand that these are qualified dividends so the tax rate is likely 15%. Should I be concerned this is in taxable and not in a tax deferred account? I started with $50K last year.

 

[FD1000]

When someone says singles and doubles I don't know what does it mean.
I surely understand performance, SD, and Sharpe ratio. That's the only unbiased measurements of a portfolio.

I can find these at Schwab and probably at Fidelity.
This is a great example:
QLENX easily beat SP500 in the last 3 and 5 years with better for all 3.

High dividend stocks never have done or will do it in the future. In the last 5 years SCHD Sharpe is lower than VOO and both are lower than 1.
Where are the singles and doubles?
Unless your total portfolio Sharpe isn't at least greater than one, you have not done it.

I never invested in QQQ, or single stocks, but my portfolio since retirement in 2018 had a similar performance to the SP500, with extremely low SD and losses and a Sharpe over 3.

 

[L-5Player]

The S&P has had 11.73% nominal CAGR since the beginning of 2021, which is my anchor retirement date. My portfolio has returned 8.77% CAGR during the same period.

That's a smaller number, it's true... however I do not own 100% S&P, nor should any retiree. So let's correlate it to an allocation percentage:

My returns are equivalent to holding about 75% S&P with the remaining 25% in non-yielding cash. In other words, pretty similar raw performance when compared to a reasonable retirement allocation. And equally functional as a base for living off assets in retirement.

If I compare with VT, the Boglehead's diversification dream fund, it's at 8.45% CAGR. I guess I'm beating that!

At some point, you don't have to agree, but just accept that there are different ways of doing things.

 

[Montecfo]

FD1000,

Singles and doubles is a baseball reference. Someone may say " I don't need home runs. I can just hit singles and doubles with my investments". It basically means they don't have to be super aggressive or take big risks, they can be more conservative and safer in their investing.

I think this is similar to what you have said about your position with your investments, perhaps in other words.

 

[Flyfish1]

dream about that new 54' Viking they're going to get.

That is why you need lot of dividends to pay for marina fees and fuel for that beast!

 

[FD1000]

The S&P has had 11.73% nominal CAGR since the beginning of 2021, which is my anchor retirement date. My portfolio has returned 8.77% CAGR during the same period.

That's a smaller number, it's true... however I do not own 100% S&P, nor should any retiree. So let's correlate it to an allocation percentage:

My returns are equivalent to holding about 75% S&P with the remaining 25% in non-yielding cash. In other words, pretty similar raw performance when compared to a reasonable retirement allocation. And equally functional as a base for living off assets in retirement.

If I compare with VT, the Boglehead's diversification dream, it's at 8.45% CAGR. I guess I'm beating that!

At some point, you don't have to agree, but just accept that there are different ways of doing things.

I do accept it.
My portfolio is invested at 95+% in bond OEFs with much lower volatility than even bond funds but performance is in par with stocks.

This thread is discussing high dividend.
Over the years several investors have claimed that these have offered better...
I'm still waiting for the proof that higher dividends have a consistent better Sharpe ratio.

 

[dobig]

I believe you're the only one talking about 'high' dividend.


We have a thread on CEFs if anyone is interested in that.

 

[dobig]

I could not agree more, and it has been pointed out several times already that for many of us that assumption is not realistic. As I have said, I am open to shifting my retirement strategy to a more hybrid approach than the growth-skewed approach (70/25/5 stock/bond/cash, mostly in tIRA) I have been taking, which is why I continue to follow this thread and others on "income investing." What I would like to get a better grip on is how to decide what percentage to allocate to dividend stocks/funds along with "some bonds." And if so, what would be some good dividend funds. I'm a mostly hands-off kind of investor, happy to hit only singles and doubles, and SCHD sounds like a favorite of such investors. Current dividends from taxable and tIRA are nowhere near my spending needs, so I have little concern about losing control to too much income set on automatic.

As much as I like SCHD if I could hold only one dividend etf it would probably be FDVV. Still pays around 3% and much more balanced across growth, value and quality. You will likely get more growth due to the heavy weighting of the top 4 tech holdings but at the expense of dividend growth. A good inbetween would be DGRO which has excellent growth as well as very good dividend growth (220% past 10 years) but current dividend yield is around 2%. There's tradeoffs in all of these dividend growth funds so you just need to figure out what's most important to you.

 

[OldShooter]

... I surely understand performance, SD, and Sharpe ratio. That's the only unbiased measurements of a portfolio. ...

Be very careful with this. Standard Deviation has meaning only in the context of a "normal," or "Gaussian" distribution. And, of course, the distribution of asset prices is different for every asset and probably none are Gaussian. So, calculating SDs for different assets produces a series of meaningless numbers where comparisons of them is even more meaningless. Comparing Sharpe ratios has the same problem because those ratios are based on SDs.

Various forms of variance measurement have been popular with economists for millennia, but I have never seen an argument that variance is at all correlated with risk. Real risk is hard to quantify, which leaves us with only the Potter Stewart test: "I know it when I see it." Risk is Lehman Brothers, Enron, General Electric, Sears, Global Crossing, etc., all of which are easy to see but only in the rear view mirror.

For more than you ever wanted to know about this, read Nassim Taleb with particular attention to Extremistan and fat tails.

 

[Montecfo]

To me the real value of a thread such as this is to generate new investing ideas. Folks can pick among those as they wish.

I have seen several here that I find interesting and will research further.

 

[Koolau]

To me the real value of a thread such as this is to generate new investing ideas. Folks can pick among those as they wish.

I have seen several here that I find interesting and will research further.

Exactly! I never thought I'd be interested in Dividend investing - but now I am. Who knew?