04-09-2021, 12:02 PM
(04-09-2021, 11:48 AM)ken-do-nim Wrote:If they held the same stocks in the same proportion forever it would be a similar outcome. Fees compound too so that makes VIG much better than most other ETFs over the course of decades, but less attractive fees vs a no fee DGI port that was identical. When you buy an index or any ETF you are assuming you can pick a smaller number of holding that will outperform a broad market average over time. Understanding your funds investment strategy is important. Will they automatically dump a stock that freezes their dividend or cuts it. Do they adjust holding percentages by market cap? Do they window dress at the end of a quarter so the next report looks good? If not, then what criteria? Most actively managed funds find a way to under perform for a variety of reasons.(02-22-2021, 09:27 AM)fenders53 Wrote: We discussed this sometime back. I think the ETFs fail to meet the DGI in part due to turnover. Hold them for years and you still get about the same yield. If in a taxable account they generate Cap gains taxes from trading. If you do it, VIG is among the recognized best. It's a Waterhouse ETF. I preferred VYM though, also from Waterhouse. Pays a considerably higher div because it holds more shares of the high yielding aristocrats like T, Chevron, ABBV etc. I say this without looking at them for about a year. I think DGI is properly done with individual stocks. Grab a couple of the best, (like AVGO) and just hold them for the DGI yield on cost trick to properly work.
I'd like to understand this better.
Let's say I park $10k in AVGO. In 10 years, that $10k grows to, let's say $20k. They keep the dividend at 3%, so when I was getting $300 per year, now it's $600 per year.
Now let's say I instead put the $10k into VIG. What happens differently? I see today its yield is 1.41%. Has that not remained constant as the price has appreciated? Did it use to be higher?