The video today is all about focusing on total returns. Thanks for watching! Try M1 Finance: bit.ly/TryM1Finance How to transfer to M1: bit.ly/TransfertoM1 Seeking Alpha Premium (get 58% off): bit.ly/SeekingAlpha-DGI Instagram: instagram.com/dgi_jake/ Dividend Reinvestment Calculator: docs.google.com/spreadsheets/d/1W8UvXLZdEpVX-UPTKiHIT1oYIkj7Omvf30FgB3FTKWY/edit?usp=sharing
I am relatively poor, but according to the laws of my country (Estonia), Dividend shares are reasonable because as long as I do not withdraw money and the dividend profit does not exceed the money I put in, I am not taxed.
I have invested a lot into dividend stocks over the past 2 years. They, at least, give me some growth while the economy is down. It helps give you some protection during downturns. I try to invest at least $800 in dividend stocks. It would have been nice if I had started a lot earlier, but with large regular investing, I'lll make good headway. I am getting about $120 in dividends per month. My goal is $160 per month next year.
i just started, and wished i did it earlier to. I just didn't understand what investing in stocks meant when i was younger, and now i realized i wasted a few opportunities to invest like the recent covid stock crash...q_q
@@az5129 I made money from COVID. Well, I did invest in 2019 partially assuming something like COVID was going to happen. I bought a bunch of gold investments and sold. That helped, but I am very much down this year, but my dividends are at least helping.
@@DividendGrowthInvesting Thank you, bud! I am going to be very excited to see how things look in 5 years. :) Because I do rotate in terms of throwing money at the different dividend stocks. If you do that for a few years, at some point it becomes like a tree that all of a sudden grows and grows.
When building up a dividend portfolio, its a nice thing to relate to your own needs. Watch out that the telecoms dividend (AT&T, Verizon...) will pay your communications bill, the car manufacturers dividend (Daimler, Volkswagen, Continental) will buy you a new car from time to time and Walmart is paying your groceries, HP and Intel are buying your new computer and so on. I'd say that is a good way weighting the brances - but don't forget the companies behind, enabling the businesses (Cisco, SAP etc.).
On a bad day you can lose several years worth of dividends. I just keep selling calls to earn 2 to 5% monthly and it does not matter if the shares get taken away as there are good buying dips each week. I also sell monthly put options for similar returns. The calls also protect my downside and allow me to close out with gains on the calls and put stops on the stocks if the market is getting too weak.
One thing that Jake hasn't pointed out explicitly is that is okay to accept lower total returns in exchange of not having to sell stocks during times that are not in your favor e.g. bear markets. If you retire at 60, your bet would be that there will be no scary bear market or global crisis in a span of let's say 20-25 years. If you retire early, that increases to 35+ years. If there is an event like a global pandemic, you would be forced to sell at much lower prices. If you have decided to invest in dividend stocks, you may get lower total return, but you would be forced to sell much less or not sell at all during unfavorable times because you would be getting dividends to cover your costs. I think that is a big advantage even though it doesn't look optimal at the first glance.
Such a great point. Thank you for saying this Daniel! You are so right when it comes to this and it is easy to over look. We are seeing it now in 2022. If you don't have a plan B with the traditional 4% rule, you could be in big trouble in years like 2020. Great comment!
Yeah but also if you are invested in god companies, etfs, indexes, mutual funds you’ll be fine. At the end of the day peolle forget as well that if you keep investing in bad times how much better your gains will be in the good times right. Say you invested when the market was down like 30 percent and stayed the course. Well when the market is up again. And reaches new highs you will be up exponentially. It’s just time. Have to see through all the noise people get scared because they don’t understand investing
Yeah but also if you are invested in good companies, etfs, indexes, mutual funds you’ll be fine. At the end of the day peolle forget as well that if you keep investing in bad times how much better your gains will be in the good times right. Say you invested when the market was down like 30 percent and stayed the course. Well when the market is up again. And reaches new highs you will be up exponentially. It’s just time. Have to see through all the noise people get scared because they don’t understand investing
History shows there is no difference in selling shares of the S&P 500 vs spending dividends. Maybe the future will be different, but so far it’s just a psychological fallacy. The same amount of money in sold shares of SPY vs spent dividends usually results in about the same total return in the long run, with SPY typically outperforming.
Jake, i remember following and watching before you kid was born. 1 1/2 years later and loving each episode. im 24 and im breaking the 300k point this year!!!
7:10 It you look a many of the dividend stocks (mainly REITS) they have actually outperformed this year. They have been relative unaffected by the war between Ukraine and Russia.
I literally had this question and came to find out if you had answered it already. And then I saw this video. Whoa. Freaky stuff. Thanks for the videos brother 🙏
lol I bet that was freaky! It happens to me all the time on instagram.. I talk about wanting a home pizza oven and all of a suden I get flooded with pizza oven ads.
I agree kohls has stagnant revenue, but if you look at there balance sheet they own 9-10billion in property, while only holding 1.9 billion in long term debt aside from lease obligations. The company is making a lot of money, they’re buying back shares like crazy and it’s currently priced as if there going bankrupt. The thing is if they were to close and sell property today that is an 8 billion dollar profit, while the company trades for 4 billion market cap. Meaning the book value should be around double what the market cap currently is
The real estate piece is really interesting! I don't know the business well enough to go deep into where the company is going from here. The stock has not seen a lot of love that is for sure!
Dividend Irrelevance does not say that dividends are worthless as part of overall return (duh, money is money), dividend irrelevance says that the total return of dividend-paying stocks is no better than non-dividend-paying stocks. Dividend-paying as a characteristic of a company should play no role in selecting which stocks to buy.
Hello from vanvouver Canada again. I have a very similar background to you. The only difference is my uncle was working in wall street and he got me started with investing.
use SCHD as your core holding and add some QQQ. growth problem solved. I’ve never understood the US tax policy that reinvested dividends are taxable. seems like the govt would give you ‘1031 exchange’ type of deal on dividends
What is wrong with being a "landlord" who buys properties at cheap or reasonable prices as his goal is to get a good income stream which could be reinvested in same or completely different (growth ) ventures? Does the landlord look and the market price of his properties every week? If he is planning to hold them and even accumulate for decades while they never stop generating cash flow, what's wrong with that? If dividends are not guaranteed, neither is growth for any company and its underlying stock. However I understand that its more preferable to pick companies who buy back stocks as this increases shareholder yield and that's what big investors look for. Plus a high div yield is close to the long-term average annualized rate of return of the broader market. Please prove me wrong. I would like to learn what I am thinking wrong here...
I'll be retiring in the next 2 years and just getting started in dividend investing. I have a good 401 k that will allow me to retire at 60. is there an analysis tool that will identify if a stock or fund is qualified or not. I learned a lot from you recently concerning the tax effect on qualified or non and how to pay $0 taxes. thanks! it was eye opening!
Thanks for the video Jake, very interesting. One quest: considering Total return, if for instance I would compare growth stocks like Tesla or Nvidia, during the years they have destroyed value such us MO. So why I should stay on value / dividend stocks, considering total returns? Thanks again
when it comes to total return, it doesn't matter if you got 500% performance on a growth stock or a dividend stock. For many investors, however, the chances of achieving a greater total return in an identical period of time with a growth stock than with a dividend stock seem clear. however, one never knows beforehand whether the next 10 years will provide an excellent base for growth stocks. We are currently seeing growth stocks underperforming due to high inflation and rising interest rates - dividend stocks are doing much better. Conclusion, we cannot know which strategy will work better in the next 10 years. One thing is certain, though: while all stocks go down in a crash, growth stocks don't provide you with cash flow. so you don't have that much money left to chase after. if you bet on dividend stocks, you get predictable cash flow that allows you to buy cheap stocks in a bear market. With cash flow you increase your scope of action.
TAXES!!! Oh really Not one person I know on earth will decline a raise at work. So why would you be afraid of taxes on passive income (in most cases) at the same or lower rate?
Hi there, as absolute beginner (not even started yet) you touch an issue that still stops me - the taxes. As foreign investor I should pay 30% tax on the dividends - that's "OK"... the problem I have is that I dont know how it should be done and I don't want to have problems with Uncle Sam. Is there other foreigners investing in US market to give me a push how it manage the taxes - are they automatically paid by the companies, or I need to fill a forms and sent them to the US tax administration?
When companies are paying out dividends they automatically with taxes and pay these to the US government (or whatever country the company is located in). This is called withholding tax You may need to pay additional taxes in your own country, however you will usually be able to offset the withholding taxes paid. Example: I pay 15 % withholding tax on dividends from my US investments In my home country dividends are taxable at 27 %. When calculating taxes in my home country I only need to pay the difference between the 27 % and the 15% (ie 12 %) If you are in a situation where you pay withholding taxes abroad that are higher than your final taxes in your home country, you may in some situations be able to claim a refund for too much paid withholding tax in US. This could be the case if there has been withheld 30 % tax on your dividend payment, but the double taxation treaty between US and your country only stipulates that investors should only pay 15 % withholding tax. In this case you would need to claim a refund for excess withholding tax of 15% with the US government (not your home country government). Exactly how the withholding tax refund process in US works I cannot tell you as I have never had to apply for a withholding tax refund in US. When my US companies pay dividends to me they usually withhold 15% which is in compliance with the double taxation treaty between US and my country. In general you should not be worried about getting a tax claim from the US government, as the dividend paying company will be responsible for withholding taxes from your dividend and paying these to the US government.
@@DividendGrowthInvesting It is so funny watching RU-vid videos from US investors where they complain about having to pay 10-15 % tax on their dividends or other type of income (and usually only on income above 10-15 kUSD or more), while being in a country where I pay 27 % on the first approx 8-9 kUSD and 42 % for any income above that. Luckily my country have better wellfare systems so I do not have worry about costs/savings for education or health (which are significant expenses in US)
Nice vid. Always lovin the positivity you have with your vids/great stuff 👍. Yeh , its funny at my work, all the caos recently with bitcoin and lots of people all upset and people complaining about the market is down , on and on. I just say well you could always invest in the market for dividends? just sit back collect money and (if you want "do nothing basically"), usually i just hear "crickets , and a few surprise Pikachu faces... HA!/alot of people just dont "get it" but then again, some people just absolutely must have drama in there lives, it get that/its just not for me. Thanks again for the vid, -Cheers
I actually like the idea and concept of dividend investing and I want to eventually become a dividend investor. But I am in my early 20s and believe that long term better to focus on growth and build my portfolio before going to dividend and focusing on income. Because if I can get like 2 or 3 percent more of capital appreciation each year (vs dividend investing) for 20 years than those 2 or 3 percent will make a big difference.
Hey Michael! That extra 2-3% is massive when compounded over decades! Focusing on growth or a dividend growth strategy is likely going to perform better than a pure value or high dividend approach - in terms of total returns.
Just go with VTI or VOO in that case then, not growth stocks. I know the last decade of constantly falling interest rates following the great recession has practically beaten it into people's heads that growth stocks, well, always grow in value faster. That is absolutely not the case. Value (which most dividend stocks would be considered) has outperformed growth for decades at a time, and for the last century overall. I agree you should invest according to your investment objectives. But, I'm only warning you that if your plan is to go all in on growth stocks/ETFs assuming you will always outperform in total return, you could be sorely mistaken. That *could* happen of course, or value could outperform growth for the next 20 years. Nobody knows until it happens. Holding the total market is safest if you're focused on capital appreciation, that way you benefit no matter which section of the market is driving the most returns in the future.
$50 is likely too low unless you have 40+ years so more likely with $250-$300. You actually would forecast with a higher rate of return. If you are in a 100% stock portfolio, the market has returned 12% a year on average since 1926. investor.vanguard.com/investor-resources-education/education/model-portfolio-allocation
can be cut - sure - but lots have paid and increased for MANY MANY YEARS - small set of market - HOOOY - invest in ANYTHING and earn dividends inclu ETFs of the ENTIRE MARKET - total returns matter - YES THEY DO - choose your dividend stocks wisely .. need to be RICH - HOOOY again .. underperforms the market - HOOOY again -
I thought I would ask here. if I contribute my 6k/yr to my roth ira, but reinvest my dividends, is that like cheating and actually having more than 6k to invest annually?
The thing that really opened my eyes and helped me grasp the concept / importance of total return was seeing my yield on cost after holding positions for a long time. Share prices went up along with the dividend yield and before I knew it that modest yield became quite high based on my cost.
@@StlPike2004 which ones? Way to persevere and hang on for so long. I've been investing/trading for 2 years and just barely starting to want to buy and hold
@@Discovery_and_Change MCD is one. Purchased for $25 and its dividend is over $5. Waiting for DIS to bring dividend back too. Purchased some for $25 as well when I was a kid.
I agree Dividends definitely, matter especially if you plan to improve your net worth. Many don't care for it cause it's not right now money. But I rather reinvest my dividends for the long haul.
That's why you're supposed to grow your wealth with growth stocks and funds, you move the money into dividend stocks after you retire. Build with growth, transfer to dividend. Don't have to do all of it, you can do half if you want. It's not a big deal if you wanna have one dividend stock in your Roth or something while you're growing but most of it all should be growth until retirement. Move some into dividends, some into real estate. Keep a nice chunk of cash also. I think this is the optimal way.
@@chriswilson1968, If you sell your growth stocks when the market is high that means you are buying dividends stocks at a higher cost which equal less dividend income.
@@HitsFromThePast I dont think so, plus who said it will be high? If you transfer 1 million into a dividend stock that pays 4% it doesn't matter where the market is. 4% of a mill is 4% of a mill. Also like I said you don't need to transfer all of it. Either way the best strategy is to grow with growth, move into dividends after retirement. You can research it yourself
Total return is the only thing that matters long term. However, when approaching retirement, sequence of returns, volatility and draw downs matter a whole lot. And no one ever knows when the volatility is coming. For THAT reason, to me, dividend growth investing through SCHD or a similar index fund makes a ton of sense with a large portion of your portfolio. SCHD has been my foundational and largest holding. Its stability has enabled me to pursue alternative investment options with smaller allocations, such as options trading with growth stocks and rental real estate. I would recommend dividend growth investing as the foundation and core holding for any portfolio. And if you find you aren’t outperforming SCHD with your other investing pursuits, quit trying and keep it simple!
Dividends can be cut. Sure but if that happens you sell the stock and invest in another with stronger dividend history. I really don't see that as a negative. You're really not losing anything.
100%! Total return including all unrealized/realized/dividends should all be factored in to truly understand total returns! I think you hit the nail on the head, loving frugal, and investing early, realizing the value of money, and investing for the long-term quest. Good video brother!:)
For anyone reading this. The Free Cashflow is Cash from Operations - Capital Expenditures. You can find that in their Cashflow Statement in the Financials tab in Seeking Alpha.
Thank you. I’ve always looked at cash flow from operations to see if the overall trend is up year over year but I’ve never subtracted capital expenditures which makes more sense.
Thank You Jake, for all you do! I have a question for you. I'm 60 years old and was going to retire this year. But, because of my situation, unfortunately I'm starting all over again! I still have my job, but honestly, I really want to retire at 62 years old now. What would you do? Can you possibly steer me in the right direction?
Hi there! I would recommend looking at stocks/ETFs that have a higher start yield (I like anything 4-5.5%). In my opinion in your case, the best thing you could do is max out your tax advantaged accounts (HSA, Roth IRA, Roth 401k etc..). Once you have the right account type, then looking at investments that are yielding higher, but still have some growth to them. I personally really like JEPI, SCHD, VYM, SPYD and maybe a little allocation to QYLD/RYLD if you want to focus on dividend income. Hope that helps!
i definitely believe in rule #4 !!! and i would love to hear your story about how you found out about your wife debt !! money & relationships! especially considering how few people actually invest. online its like everyone invest but in real life basically nobody invests
Oh I was not happy that day lol... Well if people are interested in that, I can talk more about it. Here are a few videos where my wife talks about her experience. Older: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Rlwysueq-6U.html Newer: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-QjT-2zaCIcM.html
I year later your video is still very helpful! Do you recommend dumping lump sum (all in )or spreading out over the years left till retirement? Thank you in advance
I startrd buying Kraft Heinz ("bad" stock) and Comcast (good stock) duting the past 3 weeks, and, ironically, Kraft Heinz is slightly positive while Comcast is down -4%, but I'm guessing in the long-run Comcast will outperform it?
I've been buying div stocks and non divs. I buy based on value. None of the ones you listed meet my formula for value, so I didn't buy any of those. I have other div stocks. Some only pay 1% or even less, so those are a hybrid. One thing about div stocks, if they are good, is when I build it up, I'll be able to have a consistent-ish monthly income without any transactions needed.
I'm nearly 100% into VTI ETF. I'd love to have you give your top 5 Dividend ETFs to look at. I've been enjoying your channel since we met. It didn't click then but we're both doing barrista FIRE. Crazy to meet another person who's doing it. I was laid off in the second wave of the tech rescession in 2022 and just embraced it.
Hey!! lol what a small world. Yeah it was really a rough couple of years in tech. I'm glad to be in this new chapter. I responded to your other message regarding the google keywords. ads.google.com/home/tools/keyword-planner/ From there you go to discover new keywords. Also if you are doing research for topics, you can see what is trending here: trends.google.com/trends/?geo=US
Hi, sorry for the new post, for some reason the reply button doesn't work :( 30% is brutal indeed... however I should choice between the far more insecure and undeveloped local stoc market and the high tax (but also high profit) US market :) And there are really nice opportunities in US that in general worth the robbery :)
Dividend investment can provided a better return than just leaving the money in bank account.. so the return issues or have to be rich is wrong. Dividend investment should be for the long term. Look at reality income stock.. reits have all performed well.
Thanks Jake - this immensely helps…subscribed to your channel a couple of weeks back. Love the content you bring for us. Loved ‘total returns’ and how to find out, what params to look for and where!! Thank you Listening to it in Dec 2022 😊
what i learned in my few year in the stockmarket is, what value does a company give me if it doesnt give me money back? Sure the price could rise but then i would have to sell my stock. Why would i wanna sell my valuable stock if it could just generate growing cashflow for me?
So many of these dividend stocks keep issuing more shares... many even dividend stocks look more and more like ponzi assets... so many of the standard companies you hear about you face dilution all the time as they issue more shares... I am moving away from most stocks...
Great video, thanks a lot! I checked the Comcast stock "Total Return" and it seems I was wrong to buy it (5 years negative 6.69%). Hope after watching your video I will do fewer mistakes.
Now that was GREAT- I'm also 100% invested in my HSA / Roth IRA in ETF's and I've set up a small energy stock dividend account. I'm also starting another dividend stock brokerage account slowly. Thank you- from Dallas TX
This is exactly what i was looking for before i go ahead and finalize my portfolio..awesome information you have provided buddy..i am now a subsriber and following all your other videos also . Continue the great work 👍👍
After I found out that money is only a tool to exchange for values, I stopped saving and started investing.... Invest your money to make more money, By saving your money you only lose its value and it gets depreciated.... a fellow creator. +++
Can you clarify something for me? If Total Return includes dividends reinvested... if you are taking the dividends as "passive income" then how are you realizing the stated "Total Return"? Seems like your videos sentiment of "I like passive income, and heres why Total Return is important" ... are at odds with one another.
I always appreciate your humor, relatability, and great content. I wonder why there is such linear thinking.I don't feel that I have limit myself to only dividend investing, though that is generally my primary focus. But for me, if an investment seems sound, I will definitely consider it no matter what. Thanks again!
Thank you for saying that! That is where the core and satellite approach to investing comes in. You can have your core of dividend growth ETFs and satellite positions of growth stocks/ETFs.
Just found your channel, very informative with a nice perspective/take. I would like to hear your take on Main Street Capital (MAIN). It's a BDC with a high dividend yield with a monthly disbursement. Thank you.
T is a good example of Companies cutting their dividends, not to mention their stock price has not rebounded since the pandemic. As far as taxes I pay taxes on my investments through my working income so my portfolio can continue to grow. Being self employed I start tax planning in September to see if I have enough taxes paid in and to do year-end tax planning. Another good video to inform investors what to look for and learn.
Thank you Jake for your time and your videos. I'm learning a lot watching your videos, I'm new to investing and I didn't know about the total returns and how to analyze companies and all that stuff.
Just read what Terry Smith, Buffett or Charlie Monger write. They're not 'dividend' investors, instead they look for quality companies and some happen to pay more in dividends than others. A lot of the RU-vid 'growth' v 'dividend' thing is for clicks.
@@DividendGrowthInvesting They don’t invest in companies for the dividend and many of their holdings pay only around 1% yield like Apple. It’s the moat and quality factor they go for eg high ROCE
Seeking Alpha total return is really confusing. If you invested $100,000 in QYLD in August 2017 your portfolio value would be close to $130,000 without reinvesting dividends. Even after taxes portfolio value will be above $100,000
of course you should focus on the total return and dividends are nice to have not the only thing to consider, i still like dividends from reits, it motivates me more :) greetings from berlin
There is a whole long list of dividend paying growth stocks. Two were DIS and MMM. Both dropped 100 points 2021-22. Where would that leave an individual retiree? How many can handle a market that today is constantly changing? How many have 20 years or more to wait until their investments are 'repaired' and returned to a total return award? The old widow and orphans stocks can't be relied on anymore.
Nice work again. I need to get that Seeking Alpha prime. Just been stalling on it as I only have about 22K generating about 1750 yearly in dividends. I figured I be wasting 100 dollars of that right now. I figured once I am passing 2K then I would do that. I just been leeching off You Tube and doing whatever research I can access.
Hi! New sub here…So my question at the end of the video, in your tax deferred accounts you mention you use all low cost great dividend etfs, and individual dividend stocks for your individual account. When factoring in income tax on the individual account, I must ask why you decide to do this ? Thanks !
Your amazing your video explain how I feel. About dividend but I didnt know about return that way. I always had a thing about high yield. You nail it. It Dont pay and I see why. Thanks for your knowledge
Jake you being an average investor is the reason why I love your perspective and channel as a whole. You earnestly provide information not because of what you can garner for yourself in terms of residuals, but because you truly want to proliferate this info for the betterment of others. Thanks for being - and continue to be - awesome!
