(10-14-2020, 03:37 PM)ken-do-nim Wrote: I am in my late 40s and plan to keep working for many years to come. I am in the process of accumulating a nest egg, so that one day I can retire and live off the dividends. (To be more specific, in lieu of long term care insurance, I'm thinking of putting my nest egg into an irrevocable trust around age 70 and living off the dividends.)First of all I'd be interested to learn about the irrevocable trust. Who are you leaving the trust to? How does it work?
Question: what place do dividend stocks have while you are in the accumulation phase? Take AT&T for example. The dividend sits at 7.5% which, were I retired, I think would be a cornerstone of my portfolio. While growing my nest egg, however, why would I invest in it now? A year ago the stock was at 38.47; it is now 27.49, a significant degradation in price. I'm currently in mostly tech stocks, and even if AT&T hadn't dropped in price, they are doing much better than 7.5%. Even the S&P 500 index VOO was 274.51 a year ago and today sits at 319.76.
In hindsight I am a believer in the "mix it up strategy". I have learned that whatever I did might be very good for 5-10 years, then mediocre at best for the next decade.
From age 25-55 I invested 90% of my port in equities, often more than half of that in growth stocks. At age 58 next week, I have found a much more conservative income approach. Regarding dividend stocks, they are not all created equally. T is an income stock. In my opinion it's a poor excuse for a DGI stock. It's fine in my port now, not so much if I was younger. My best Div stocks were stocks with a potential to grow, and only add real money on pullbacks (other than DRIP). Nothing at all like 2020 T. Back then it was stocks like JNJ. T isn't JNJ 2000. It's probably not even JNJ 2025.
As far as tech outperforming T, we are in a 10yr bull market. It looks a little different after a tech stock drops 75% and stays there for 10 years. I've lived that one. CSCO and INTC were my hard lessons. Well actually the large CAP 90's tech that filed BK or sold out at <10% of previous market CAP were the real lessons. That horrible time will come again.
I still mix it up, and perhaps you should too? I invest a lot of my T Divs into stocks with hope for growth. Same with MO and a few others. In a back handed way I am still dripping DGI. The DRIP is just bigger with some high yielders in the mix.