09-08-2015, 10:02 AM
Dividends represent new cash. They can be invested anywhere. One would think that the smartest course is to deploy dividends in buying the best current value that is available, not simply buying shares of a stock because it provided the dividend. For the period of the chart above, DG investors would have been better served by investing all of their dividends into shares of IWF which in hind sight was clearly the best value over the duration.
VNQ is a REIT ETF, holding a wide range of blue chip REITs. I don't know why the distribution has decreased. My guess is that the higher payout year there were some capital gains distributed. The dividend stream itself has almost certainly increased. I am sure that many on this board hold tickers that are included in VNQ. Most pay good dividends but are not generally great total return candidates.
The more I dig, the less it appears that the big cap DG stocks are particularly great total return candidates. The best opportunities seem to lie in small cap and mid cap growth stocks. I'm focusing more on those areas, but am emphasizing growth stocks that also pay dividends. Am not interested in finding single issues from the maze of tickers in this large subsector, so will mostly limit investments to a diversified basket of ETFs. The portfolio will also include big cap DG stocks, but those mostly won't be purchased until valuations are much more favorable than they are currently. I'll be looking for P/E's between 12-14, companies with low debt, low pay out ratios, and lots of cash on the books.
VNQ is a REIT ETF, holding a wide range of blue chip REITs. I don't know why the distribution has decreased. My guess is that the higher payout year there were some capital gains distributed. The dividend stream itself has almost certainly increased. I am sure that many on this board hold tickers that are included in VNQ. Most pay good dividends but are not generally great total return candidates.
The more I dig, the less it appears that the big cap DG stocks are particularly great total return candidates. The best opportunities seem to lie in small cap and mid cap growth stocks. I'm focusing more on those areas, but am emphasizing growth stocks that also pay dividends. Am not interested in finding single issues from the maze of tickers in this large subsector, so will mostly limit investments to a diversified basket of ETFs. The portfolio will also include big cap DG stocks, but those mostly won't be purchased until valuations are much more favorable than they are currently. I'll be looking for P/E's between 12-14, companies with low debt, low pay out ratios, and lots of cash on the books.
Alex