The PROBLEM with Dividend Stocks

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DISCLAIMER:
This video is for entertainment purposes only. I am not in any way acting as an agent or representative of the Department of Defense or United States Federal Government when presenting this information. I am not a legal or financial expert or have any authority to give legal or financial advice. While all the information in this video is believed to be accurate at the time of its recording, realize this channel and its author makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in this video.

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[edwinseeraj]

Slow and steady wins the race. I agree with you if you’re in it for the long run stick with the market ETFs.

[thomask]

Big difference between non-dividend paying stocks and dividend paying stocks: I don't have to sell one of these in order to get paid.

[NaamWynn]

Well said man. Me personally, dividends are a bonus. Most of my investments are targeted more for capital gains. For those who heavily rely on dividends and ignore capital gains, might be in a world hurt. Great vid man!

[nathanpineda]

Jake I can always count on you to give unbiased investment advice. You’re extremely educated and I appreciate how you always include opportunity cost to provide an in-depth comparison. It has really helped me make the best financial decisions thus far. Keep up the good work, you deserve a larger audience!

[karenbutcher]

How about this comment? You were born for teaching! I’m a new subscriber and have learned much from you. I like the way you discuss your topic but at the same time give an explanation. 😀

[raymondsimmons]

Great video Jake. That is a good rule of thumb that a company had to have doubled over the last 5 or 6 years to have kept up with the s&p500. Using this rule, you can quickly determine whether a company has underperformed or outperformed.

[richard]

Thanks for calling this out Jake. This is the major flaw in the complete dividend investors' argument. Ok, great, you're getting dividends but are you showing growth? Even worse, are you are losing value? Maybe. Maybe not. But no investing strategy is perfect and that's why I diversify as much as I can. I have growth stocks, dividend stocks, bonds, cash, etc (getting back into real estate when this nonsense is all over). Bottom line is, there's no perfect strategy and if there were this whole system wouldn't work... at all. There are always winners and losers. We all just hope to win more than we lose.

[jonlewis]

Man Jake thank you for clearing the air there is so much noise out there.
You certainly have pointed out the fact that anybody anybody can have a YouTube channel and say anything they want to say to just try to win a popularity contest and have subscribers what a complete waste of time.
I on the other hand appreciate your channel and your professionalism and your knowledge and I'm learning from you so thank you again.

[ScottLeRay]

Good video Jake. I like a company to have both capital appreciate (most important because I'm young) and a dividend (with a low payout ratio). In your example with the 2 companies your kind of right...but kind of wrong. If both companies appreciate 20% and one pays a 10% dividend, the company that pays a dividend is definitely better. The divdend doesn't get paid from the capital appreciate or the gross profit for that matter. It gets paid from the free cash flow. It's important to look at many different things when appreciate, free cash flow, return on equity, return on investments, etc. But your right, picking a stock specifically for dividend income is not you're in retirement, but thats whole other topic. Lol

[suzieque]

Wow. New to investing. Have done a lot of online and book research and watched a lot of youtube videos including many of yours. I've subscribed to your 'channel' on youtube because your videos are informative and you share what you've learned without any catch. For example, the 5 year comparison and tool /formula you shared in this video is new to me and one that I am adding to my tools to assess stocks before buying! Thank you for sharing.

[PassiveIncomeTom]

*Good points. I started out in growth stocks but now predominantly in dividends with some growth.* 😉

[roburb]

Stocks are just fun for me, a chance to earn (or lose) money after my other investments. First, my wife and I both max out our 401Ks, both max IRAs, and then an additional mutual fund account. I look at stocks as quick money, but if I stick with them for the long run I do review the aristocrat list.

[foggyshores]

Jake, one of the best videos you made. I 100% agree w/ your thesis. I'm amazed when I hear influencers go on and on about AT&T, 3M, etc. Keep making these type of videos.

[danieladrianzen]

Good video, I agree capital appreciation should not be completely ignored. However, I do have a few things I disagree with. First, what about dividend growth? Sure, if you are looking at a purely 3 or 4 % dividend from year 1 and the dividend doesn’t grow, nobody relying on this dividend only will have beaten the market. But if the company is consistently growing its dividend and you are reinvesting that dividend, in several years, you can reach a point where you are netting 10 or even 20% yield on cost from your out of pocket investment. In that case you are most certainly beating the market, even if the stock value doesn’t move. In fact, if the value of the stock goes down that helps you reach a higher yield on cost faster. Another thing, you don’t necessarily need to sell your stocks as you suggest, at least not with dividend stocks. You can pass them on as an inheritance, so that future generations live off the dividend income, which is why i think people put so much emphasis on dividend aristocrats. And in that case, capital appreciation truly becomes less important. Finally, although you’re right in saying that capital appreciation is also passive, for a growth stock, once you sell, thats it, you have locked in that value and you wont be earning any more money. Which is fine if thats what you want. But with dividend stocks you will keep earning income, and as long as the dividend grows you will keep making more and more income, and once again, there really isn’t any need to sell. So in that sense, I do think dividend stocks are more passive. Overall though, I agree with you though, I also prefer stocks that have shown capital appreciation and dividend growth, and I look at companies with similar profiles to those that you are interested in. There may be more fruitful strategies, I just like this one the best!

[Ned_Talks]

I’ve always liked dividends because a consistent dividend keeps them theoretically more honest.

[mcmusiic]

New to the channel man, love your videos. You give a different perspective compared to these other youtubers. Keep doing your thing!

[TheIgnoredGender]

I'm 50/50. Capital appreciation is very important which is why I hold Growth ETFs. But I also love the power of compounding. The dividends provide a stream of income that I can then reinvest into shares that will pay out more dividends and so on. Plus it's nice to get income without having to reduce your shares in the company.

[DividendIncomeBloodhound]

You make great points dude, really impressive as long as there is a little bit of growth I’m happy enough but I do have dividend growers in my portfolio too

[OurOregonlife]

There is a interesting analogy, when I was younger I drove a truck, then also went to Truckdriving school. I had driven the way I knew for along time, but was not going to do trailer hauling. I had a heck of a time using what I already knew to then also back up huge trailers. Housewives and you ladies that had never driven anything at all, Learned and we doing better then me and my 8 years of driving. Why? Because they learned this way and it worked. Key if it works then stay the course. Personally dividends, unless you plan on living off of them serve me personally no purpose . i am new to stock. But not at businesses, nor accounting. Having owned my own businesses and done well. I do find your information very credible.

[Tonymanero]

Jake kind of agree with you respect to the other mentioned Youtube creators(who I watch from time to time).I have serious money in mutual funds and Roth Ira's spread out over multiple growth and dividend stock mutual funds, but mostly S&P 500 index and, at the end of the day their''holdings'' are all very similar. I am not going to waste too much time worrying about a little difference here or there in returns. Just continuing to fund the 401k, HSA, ....and Roth and sleeping like a baby every night. It works for me.