to walk readers through the reasons that dividends should not matter in identifying a good investment.Dividend investing leads to poor diversification.
Restricting yourself to dividend-paying companies eliminates a huge portion of the stocks that are available for investment. According to a 2013 study by Dimensional Fund Advisors, close to 60 per cent of U.S. stocks and 40 per cent of international stocks don’t pay dividends.
that in 2009, 14 per cent of firms worldwide cancelled their dividend, and 43 per cent reduced their dividend.This is simply not true. The only way that a company will beat the market is if it exceeds the market’s current expectations. At any given time, the market prices a stock based on the available information, including the expectations for future growth. This is known as the. For a stock to beat the market going forward, it must exceed those expectations.
Your goal of investing until you can live off of your portfolio is still an excellent goal – just keep in mind that you do not need dividends in order to spend from a portfolio. Indeed, I would argue that there is effectively no difference between receiving cash dividends and creating your own dividends by selling off some shares.
People who are looking for regular payments could find the idea of dividend investing attractive. But in my mind, Andrew, you will get a much more reliable result by diversifying across the whole stock market using low-cost index funds.