Do Dividends Play a Role in Your Investing?

[Retired To Win]

Four or five years ago, I decided not to buy a stock ever again if it did not pay a high dividend. In the time since, my portfolio's book value has gone from $143,000 to well over $320,000. A huge amount of the increase has come from reinvesting dividends.

How about you? How important are dividends in your investing strategy?

Retired To Win
making the most of my time and my money

[jIM_Ohio]

VIG is what I use in large cap space

[Retired To Win]

More info, please!

VIG is what I use in large cap space

Enlighten me... what is VIG?

Retired To Win
making the most of my time and my money

[disneysteve]

I don't invest specifically with dividends in mind but I do reinvest them which really helps over time with growth of the balance and compounding.

[YLTL_Dan]

My friend works for Merrill Lynch and converted me to a believer in dividend stocks when he showed me the importance of dividends in overall returns. In my cash account I look for 5-10 great dividend stocks and rebalance annually or so.

[Petunia 100]

Four or five years ago, I decided not to buy a stock ever again if it did not pay a high dividend. In the time since, my portfolio's book value has gone from $143,000 to well over $320,000. A huge amount of the increase has come from reinvesting dividends.

How about you? How important are dividends in your investing strategy?

Retired To Win
making the most of my time and my money

I'm glad your strategy has been successful. Have you considered the fact that stocks in general have done very well over the past 5 years? According to Morningstar, the 5 year trailing return of the S & P 500 ending 12/20/13 is 17.98%. If 143k is invested at 17.98%, 5 years later the investment grows to $326,872.21.

http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX

So is your success due primarily to a dividend strategy, or to a rising market?

[Petunia 100]

Enlighten me... what is VIG?

Retired To Win
making the most of my time and my money

VIG is Vanguard Dividend Appreciation ETF.

http://etfs.morningstar.com/quote?t=VIG

[Retired To Win]

I'm glad your strategy has been successful. Have you considered the fact that stocks in general have done very well over the past 5 years? According to Morningstar, the 5 year trailing return of the S & P 500 ending 12/20/13 is 17.98%. If 143k is invested at 17.98%, 5 years later the investment grows to $326,872.21.

http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX

So is your success due primarily to a dividend strategy, or to a rising market?

In my case, it's the dividends specifically. Also, 5 years ago no one could know that the market would average an 18% return per year.* But you could project your portfolio's book value growth from the dividends it would generate.

Retired To Win
making the most of my time and my money

*Hindsight is always 20/20

[snafu]

I've been so alarmed by Bond rates and the plan to increase interest rates which will significantly lower my Bond MF value, I've been shifting sums that would have been allocated to 'Income' to Dividend ETFs. Banks here are strong, operate under stringent rules, pay significant dividends while still increasing value. I've also benefitted from American and International Dividend MFs. I'm looking for a reasonably priced {MER} Euro Dividend Fund for my next contribution.

We just got Vanguard last year but it's like pulling hen's teeth to get access. I'll transfer non retirement allocation when it finally gets listed for my self managed account.

[danielhermann]

The dividend payout does not by itself lead to an increase in investible surplus particularly if the purchases are through the secondary market. The dividend only helps in separating the performers from the laggards. I would pick up the list of stocks or mutual funds paying out dividends and then do my own research and work out P/E ratio, look up past history, read their management discussion and analysis, look up research reports and then invest in stocks/ mutual funds.

[Petunia 100]

In my case, it's the dividends specifically. Also, 5 years ago no one could know that the market would average an 18% return per year.* But you could project your portfolio's book value growth from the dividends it would generate.

Retired To Win
making the most of my time and my money

*Hindsight is always 20/20

Agreed, only hindsight is 20/20.

I can see the merit of investing for dividends with part of one's portfolio if one is in the distribution phase. Having a reliable income stream of dividends can be a very important part of one's retirement plan.

However, I don't see the merit of investing for dividends in the accumulation phase. In my opinion, total return is the bottom line. Whether that return comes from capital gains or from dividends is immaterial.

Currently, I am in the accumulation phase. So, I just stick with broad market index funds.

I know you put up a blog post recently providing more details about your investing strategy. I'm looking forward to reading it.

[feh]

Four or five years ago, I decided not to buy a stock ever again if it did not pay a high dividend. In the time since, my portfolio's book value has gone from $143,000 to well over $320,000. A huge amount of the increase has come from reinvesting dividends.

How about you? How important are dividends in your investing strategy?

I assume the context is equities? If so, then no, I do not consider dividends when choosing investments.

[Retired To Win]

I don't invest specifically with dividends in mind but I do reinvest them which really helps over time with growth of the balance and compounding.

What about when you're deciding whether to sell a stock at a profit? Do you have the dividends (if any) in mind when deciding what price to sell at?

[disneysteve]

What about when you're deciding whether to sell a stock at a profit? Do you have the dividends (if any) in mind when deciding what price to sell at?

No. That has nothing at all to do with a decision to sell.

Selling is something I hardly ever do anyway. I'm investing, not trading. I buy and hold.

I do have a small account (about $5,000) that I sometimes use for trading, usually one stock at a time. Last year it was Apple. Right now, it is 3D Systems. But this is total speculation, not investing. I freely admit that. I consider it play money. If it goes up, that's great. If it goes down, oh well. But in no way do dividends enter into the decision making process.

[97guns]

i just inherited $170K in dividend stock bearing 4.2%, i plan to dump it all when its settled and buy another rental property. with a 4.2% dividend i am grossing $595 a month, i can buy a $150K rental property cash and gross $1100 a month