Holding for stock Dividends is a near total waste of space

Discussion in 'Fixed Income' started by themickey, Aug 8, 2020.

  1. themickey

    themickey

    Now I want you to disagree with me.
    Buying and holding stocks is a stupid method of hoping for capital appreciation.
    I have yet to hear one logical reason, so serve it to me.

    Now I'm not saying 100% of the time, there are always outliers, eg, high dividend payers but they come with higher risk.

    Someone buys a stock for a long term investment and does so because it pays like maybe 6% pa in dividends.
    You know and I know that a 1% to 2% daily move in a stock price is not uncommon.
    A 5% stock move in a week is not uncommon.

    Why would you hold a stock for an annual dividend of say 6% if its price falls during the year?
    There are no guarantees what a stock price will do, it may go up, it may go down. This holds true for all stocks whether dividend payers or not.

    This is the only reason I know of toward the argument for dividend stocks:
    Under normal circumstance they indicate a company is profitable, non speculative, has some stability, probably won't be enormously volatile.
    If you were a stock trader hoping to trade, by selecting only dividend paying stocks, you are erring on the side of caution and your chances of trading profitably enhanced due to a greater lack of negative surprises.

    Remember though, money doesn't grow out of trees.
    By trading dividend paying stocks, although risk will be slightly less, so will capital gains unless you are a gun market timer.

    Now shoot me down! :)
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  2. themickey

    themickey

    Oh, and remember, nearly always, once a co. pays a dividend, price immediately slumps by the same amount.
     
    murray t turtle likes this.
  3. xandman

    xandman

    Stocks are based on hope. Bonds are based on promises.

    A 6% div minus a 0.40% Gov promise equals a ton of wishful thinking.
     
  4. deaddog

    deaddog

    Holding a portfolio of dividend growers for the income take a lot of stress out of ones life in that they don't have to make decisions.

    One or two wrong decisions as to market direction each year wipes out all the advantage of trading.

    Dividend growers almost always increase in value so that along with increasing income your portfolio grows.

    A company that regularly increases its dividends is more likely to recover than one that doesn't pay a dividend.

    When you get your month end statement you don't worry about the value of your portfolio ; you focus on the increase in income.

    That said, I'm a trader. I don't mind the responsibility of making my own decisions.
     
  5. drunnels

    drunnels

    T ........... Avg annual return over last 10 years or so = 10% + 6% div
    I'm retired. For the most part, I don't much give a damn what the market or individual stocks do, as long as my income exceeds my outgo. You do reach a point where any more time spent trying to make $$ is trading your life for $$ you don't need.
     
  6. %%
    Depends on the market.
    But since most of the money[billions+] is made holding stocks/years/thru mutual funds/etfs;
    QQQ/SPY …….. pays a dividend. So it just depends; plenty of good ones dont pay any dividend.
    DOW/DIA pays a dividend + it tends to underperform/LOL:D:D:D:D:D:D:D
     
  7. never2old

    never2old

    yes & no

    granny & orphan dividend growth long term should work

    short term 'on a hope & a prayer' hold, doesn't work

    if buying a dividend stock for a gain, consider buying 4-6 weeks before ex dividend then sell 1-2 days before ex dividend ... can work sometimes to get you a couple percent gain.

    I prefer non-dividend stocks that have options selling a ITM CC one mth to expiry, should get 3% - sometimes weekly CC ATM options, this is without the more complicated option spreads
     
  8. never2old

    never2old

    for the Canadians on board, take Royal Bank Canada or similar Canadian Bank

    nice 5.5% dividend, bolt on a 12 mth CC ATM for another ~5.5% for ~11% 12 mth.

    This beats putting money into a zero interest bank account
     
  9. themickey

    themickey

    This imo would be the strategy to employ.
    Stocks usually rally in anticipation of a dividend and more than 1-2%, sell on open one day before ex div date.
     
    never2old and murray t turtle like this.
  10. %%
    Exactly;
    + they pay you+ capital gains sometime...……………………………………………….
     
    #10     Oct 25, 2020