Thursday, November 9, 2023

Dividend Investing

I heard Ed Rempel at the Canadian Financial Summit. However, my link to that talk has disappear. I found that he has a site and has basically the same information on that site. So, today is my reference to his site.

Yes. I have heard about what Ed Rumpel is selling before. That is, you are better off investing for capital gains and talking cashflow out of your portfolio when you need it. I still prefer dividend investing. Read below and read his information and decide what you like.

Investing for strictly capital gain in not easy. It did try it. You have to be more careful in capital gain investing because of market volatility. You probably do not want to extract money from your portfolio in selling stocks in a bear market. This could be just physiological, but it would be a worry. It is much harder to pick stocks that will go to up, than to pick stocks that produce dividends. Just because a stock is currently rising, it does not mean that it will continue to do so, especially if it rising fast.

With capital gain investing, past history of rapid stock price growth is not an indicator of future rapid stock price growth. A stock that is rising fast is generally not a long term investment.

The dividend producers have a history. It is not perfect, but it is a good indicator of what a company will do in the future. With dividend investing you get money whether the market is up or down. And, let’s face it, dividend investing is a whole lot easier than capital gains investing. You can buy good companies and keep them for the long term.

Fun fact is that dividend paying stocks tend to go bankrupt a lot less than non-dividend paying stocks. It has been suggested that this is because when a company pay dividends, it is harder to hid problems. They actually have to produce money for their shareholders each quarter.

By the way, I believed in the 4% withdrawal philosophy when I stopped working and was going to live of my portfolio. That happened in 1999. Then 2000 hit and then 2008 hit. After 2000 I started to raise my investment income as a percentage of my portfolio. Because I had dividend growth stocks, I got low yield but growth. I was averaging 2% to 2.5% dividends on my portfolio. I made some sales and purchases to move my average to 3% to 3.5% yield and only took out what I made in dividends.

Although, he is right about withdrawing dividends. The growth in my portfolio, and in the dividends my portfolio produces, was a lot lower once I started to take out dividend income compared to when I was not.

On my other blog I wrote yesterday about Crescent Point Energy Corp (TSX-CPG, NYSE-CPG) ... learn more. Next, I will write about Finning International Inc (TSX-FTT, OTC-FINGF) ... learn more on Friday, November 10, 2023 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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