The Irrelevance of Dividends

Even in a stock-picking environment, there is no reason to believe that dividends, or the growth of dividends, would be an indication of a good stock to own.

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[benmenk]

A lot of people misunderstanding what was said here... the takeaway: don’t just invest or stock pick based solely on the fact it’s a dividend payer. The end

[SimplifiedFinanceSiFi]

Me: He's right
Also me: Uhh nice 5% div

[CanaldoHolder]

In Brazil, dividends are not taxed, yet. But here we have SERIOUS problems to invest in ETFs: ETFs do NOT pay dividends and we have to pay tax over capital gains (15%) (and the dividends will be indirectly taxed when we sell the ETF, as part of the return came from dividends). Besides that, our index is super concentraded in some companies, and most companies in the index are commodities (oil, gas, etc). 1/3 of iBovespa is Commoditie, 1/3 Financials and 1/3 others.

[MENDLER]

Ben is an honest financial advisor. A rare find in this industry.

[zaynhaque]

Forget the peer reviewed academic research and robust empirical evidence, let's hear that skincare routine.

[matthewlandolt]

As someone who is relatively new to investing, I thought this was actually a fairly neutral viewpoint. He never implies to steer clear of dividends, only that we shouldnt prioritize for dividend bearing stocks specifically for that reason. Seems like sound advice.

[GetYoJonesOn]

Ben: “money can’t be created out of thin air”
The Fed: “hold my beer”

[timelston]

I had just created an M1Finance dividend portfolio when I first watched this. I had signed up for a trial of SimplySafe dividend filtering and chosen about 30 of the safest dividend payers, across most asset classes. But what you said here made perfect sense, and I liquidated those dividend stocks and turned my M1Finance portfolio into a diversification of domestic and international total stock market, large cap value, and small cap value index funds. Sure is nice not to have to worry about keeping an eye on individual stocks now.

[NOVAsteamed]

Gosh I like it when you show scientific articles. You're the only finance channel that actually shoes scientific proof.

[Nierez]

His straight face while being so savage confuses me.

[cedrickerbidi]

In a previous video of yours, that I can no longer find, I had commented that I did not agree with you on that topic. It took me several years and a few investing mistakes to (finally) realize exactly how right you are on this ! Many books out there sound and look pretty convincing regarding dividends, some of them written by professional fund managers. Until you can check a few things from experience, and open your mind, it is very difficult to understand why this is a true fact. I have become a much better and more lucrative investor after I stopped chasing dividend growth Keep up with the good work Ben !

[druiz]

I am a dividend investor and I agree with what he is saying for the most part. But I do want the monthly cash. I don't want to sell my shares to get income and I want to give that income to my kids one day.

[CharlesPanigeo]

Summary: The fact that a stock pays a dividend does not give you any more information about a stock that cannot be explained by known factors ie (value, investment, beta, size, profitability).

[forestandseas]

Thanks for making it easier to understand Ben. As a new investor I was wondering why there seems to be such a big pull to dividend only investing, but to me all I saw was that it cuts out half of the market and disregards great growing (non dividend) businesses with excellent financial fundamentals.

[ianchissy]

I’ve always gotten the feeling from the dividend crowd that they believe they’ve stumbled on the sacred texts in some investing ruins, a secret sauce we that they alone can know about, and forget that their dividends are seen by all market participants on the planet- it’s not a secret get rich payment. The replies here are hilarious Ben, keep up the good work!

[collin]

Learning about investing has taught me the greatest threat to fucking up my future is me.
But man I get the pull of those dividend stocks. When my broad market ETFs payout their quarterly dividend it does feel like free money even though it's not.

[derrickmichael-simpleautom]

Great video Ben. At the end of the day if you are investing in individual stocks you are are a stock picker, whether they pay dividends or not, whether that is good or bad...and the only reason to be a stock picker is if you think you can outperform index funds.

[masterh]

Thank you for reaffirming my thinking, intermediate investor here and always wondered why anybody would use dividends as a investing stategy.

[matt]

Just to add to Ben's point, "Warren Buffett loves dividends and so should you" This is an Appeal to authority logical fallacy. Just because a prominent figure likes something does not mean whatever they like is true or the best. Also, while Buffett might like dividends, his company, Berkshire Hathaway doesn't pay dividends... hmmm 🤔🤔. If you want Warrens real take on dividends this is it: Companies should only pay dividends when they have nothing better to do with their capital, or if they cannot achieve a better return using said capital.

[MeticsMedia]

Thanks for the very good points you make. I'm just at the beginning of my investment journey and I was leaning toward dividend stocks because of the cashflow. However I live in Switzerland where we do not pay taxes on capital gains. So if I'm honest with myself and think rationally I would lose out on gains when following a dividend strategy.