I just mean generally. Sure, sometimes a stock might be a great buy, and it just happens to pay a good divvy, so, sure, go ahead and get it. But generally, does it really make sense? Divies are in a best case scenario taxed as long-term capital gains. And when they are declared, you have to take them and pay the tax, whether you need the cash or not. Plus, whenever they pay the divie, the stock price drops by the amount of the divy (maybe a short-term thing, but logically long-term this has to be borne out as well). Why not just buy non-dividend paying stocks, then if you need cash just sell shares from time to time? Thanks.
Bonds are taxed as interest, so are preferred shares and t Bill's. Are those for chumps? Dividend stocks give you the source of income as well as capital gain potential. As a group they dont fall as much as the general market in hard times. Sure in the long run much more growth potential in non paying dividend stocks but if your retired and need a source of income when the market is down 30%, IBM is looking much better than AMZN. Also with dividend stocks you can get access to shares at a discount if you re-invest the dividends. Some people have built their entire wealth with dividend stocks. DEFINITLY not for chumps. Time and a place
Considering the stocks from 2009 still kept and still paying dividends and all those kept are much greater than currently, it like a bonus, 9 years of dividends reinvested. Stocks seldom go down now like they use to the amount of the dividend. Matter of fact, 90% of the stocks I generally buy must have dividends, and selling short you want to sell those that don't pay a dividend but are optionable.
i had the same question for years which i also posted on this forum before. i still think there's an irrational tendency for some to prefer div paying stocks. they have these illusions: 1) "they're safer" - generally true but thats because stable div paying companies are usually mature companies. No real value for being high div imo. and high beta can be managed by small sizing. 2) "you keep the stock, AND gets cash back" - obviously flawed illusion because as you said, div is net out by drop in stock price. it's surprising how many people can't see that dividends are a zero-sum (or negative because tax) action. 3) "these companies generate great revenue" - but i see this on the negative side. That the companies don't have enough investments opportunities hence extra cash leading to divs. again no real value for being high div. i think if all else equal, a company that pays div is worse than one that doesnt. i could be wrong though - would love to hear what others think about my points above. thanks.
counter point on my 3) above: if a company generates huge revenue in surplus of investment opportunities then it make sense to return capital to shareholders, instead of hoarding cash or splashing them somewhere outside of their expertise. maybe in this case div paying is correct decision and indication of good management. or maybe stock buyback works too but thats another topic
Dividend stocks tend to outperform growth stocks in the long run (i.e. multi-decades). But during bull markets, growth stocks tend to outperform dividend stocks. THis is because a lot of growth stocks die during bear markets.
Imho put your savings into blue chip dividend stocks like Apple etc but have about 10% to play with on the markets e.g. forex. This grows a nice nest egg for retirement and is less risky. So get the pleasure and income from forex etc. and a steady income from stocks. Gamblers can try cryptos but only play with what you can afford to lose. Say 1%
Using options i trade range bound blue chips and indexes around ex-dividend dates. Return around 25% annually with minimal risk.