/biz/ - Business & Finance

>>55999100
>he doesn't know that historically the dividend drop has ALWAYS been less than the stock drop
>even when the financial crisis happened dividend across the S&P only dropped 25%

>"The same is true of dividend ETFs. Take the Vanguard High Dividend Yield ETF (VYM), which is invested in more than 400 companies. When a fund casts its net so wide, it is almost guaranteed to hold some quality companies and some that are much weaker (and susceptible to cutting their dividends). Sure enough, VYM’s dividend payments were hit hard during the financial crisis. The fund's total dividend payments peaked in 2008 at $1.44 per share before falling to $1.17 in 2009 and $1.09 in 2010, representing a peak-to-trough decline of about 25%. Annual dividend payments didn’t recover back to their 2008 peak until 2012, but an investors' cost of living would have almost certainly increased during this time.
In other words, if a retired investor owned 25,000 shares of VYM, he would have received $36,000 of dividend income in 2008.By 2010, his annual dividend income had fallen to about $27,000 – a drop of more than $725 per month. Depending on his budgeting and margin of safety, life could suddenly have become much more stressful."

>>53148438
>Dividends are stupid if you’re young, growth is better
This is assuming the markets are going to go up indefinitely around 10% per year. Considering how much fear there is in the markets now, there may come another time very soon when we see 10+ years of either sideways trading or just trending downwards. This is exactly when dividends reign supreme, because even when dividends get cut they are NEVER as bad as the % drop in share price. pic related
Dividendchads always win; they might win slower than average, but they are safer and better off in case of true economic crises.

>>53124941
>Even if we include both the World War II recession and the financial crisis outliers, we can see from the table above that average dividend cuts during recessions represented a pullback of just 0.5%.
Divvy cuts are almost never as bad as the price drop of stock value during recessions. Hence, dividend paying companies are better assets in case of a period where we stop experiencing constant rise in the markets for 10+ years.
You get cash flow without having to sell shares, and depending on where you live you can put them in a tax-free investment account with no penalties on withdrawal (Canadian TFSA for example), so it's literally tax free income that you can withdraw anytime with 0% tax.
Best thing to do with a TFSA is to gamble and raise your contribution limit sky-high, then convert to dividend payers or income ETFs and collect a fat tax free income.