Why Investors Love Dividends (And Why They Can Be Dangerous)

Ever wonder what all the hype around dividends is? With today's video, we'll dive into how dividends work, why people like them so much, and what to look out for when hunting them down.

DISCLAIMER:
Richard does not have a personal position in any of the referenced companies. This channel is for education purposes only and is not affiliated with any financial institution. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.

[superpowerfulmagnets]

I'm just a humble dividend farmer tending to my stocks.

[rogernevez]

> "Why Investors Love Dividends"
The same reason why landlords love rents.

[hyouzanren]

if they borrow money to give you dividend...sell the stocks fast!

[augustinwai]

A falling share price is not necessarily indicative that the company is in trouble. Mr. Market is known to be irrational as pointed out by Benjamin Graham and a falling share price may be a chance to buy a great dividend stock at a discount. For dividend safety, it's important to see if it's sustainable by looking at the payout ratio from earnings, cashflow, etc depending on the company. A low payout ratio indicates room for the dividend to grow as well as making it more likely that the company can continue to pay a dividend.

[DavidAntony-gqid]

Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.

[christodang]

One thing to watch out for which the video briefly touches upon is the taxation. Unqualified dividends in the US are taxed as income, so while you may end up reinvesting the dividend in more stocks, to the IRS, you've been "paid" so you'll owe taxes on that dividend. This may mean a bigger tax bill at the end of the year and depending on your tax bracket, might be something to take into account (vs a capital gains tax which you can control by controlling when you sell the stock).

[WilliamChan]

This is exactly why it's a good idea to have some portion of cash on the side ready to put into proven sustainable dividend paying companies during a downturn, when they are at a discount. High yields aren't inherently bad, but they aren't the independent variable and you shouldn't be basing your ultimate decision on yield alone

[anonuser]

I have been building a dividend portfolio for quite a few years now and am starting to see the compounding, it's great. I make about $1100 a month in dividends which go straight back in to buying more dividend stocks. In Canada there are a lot of great dividend companies to choose from.

[Asstronauts]

this video is also assuming you dont add any extra of your own money. when you combine your own money each month plus dividends it gets great!

[DavidAWA]

My friend was telling me the wonders of a high dividend stock . . . in a gold mine. Like, literally, a gold mine.
When the mine went dry, it was all gone.

[EricSmythChrist]

The strongest force in the universe? Money that compounds on itself."

-Albert Einstein

[CossacKING]

Excellently explained! I've been researching dividend stocks to invest in and this helped clear up a few deep seated questions I had like the consequences of high pay ratios, dividend cuts, high dividend yields etc. Very helpful

[Lozo]

So much knowledge for a French. In France, no one talks about finance nor stocks. It’s incredibly the wealth you can build with finance.
That you, English speaking people for sharing your knowledge for free !

[TheIcelandicInvestor]

I like companies that have the ability to retain and compound earnings at high rates, instead of paying me dividends that get taxed and I have to go to the trouble of finding a new way to invest the money.

[TheDividendExperiment]

First time I have seen this channel, very high-quality production, good video! I love dividends too

[Denny_Dust]

You deserve way more subscribers... the fact that videos from Cardi B are much more popular than educational videos is a problem.

[BryanHo]

I love dividends. I usually reinvest them so essentially I get a raise every quarter (or month) for doing nothing.

[BenFelixCSI]

Nice video, Richard. My concern with dividend-focused strategies is that they typically end up ignoring parts of the market like small and mid caps. I guess if you can pick the right dividend stocks it might not matter much.

[SBVCP]

The thing about shares, is the risk though. In general they are nice, but for them to have a competitive return, you need to be really into it and active. Otherwise, renting properties may yield more.
Ah, but if you know what you are doing and invest in startups in just the right time, then sell again at the right time..!

[cheydinal]

Wow, buying a part of a company for - wait for it - the *profits* and not for speculation. Really unorthodox