01-12-2016, 05:22 PM
(01-12-2016, 05:02 PM)ClockworkDividends Wrote:(01-12-2016, 04:38 PM)Kerim Wrote:(01-12-2016, 04:10 PM)ClockworkDividends Wrote: Furthermore, and maybe you guys would like to chime in on this, it would be interesting to see how dividend stocks compare to capital growth stocks. It seems to me that DG stocks are a bit like having your cake and eating it too, but there must be something I'm missing. perhaps capital gains grow more quickly?
My answer to this one is that I would gladly switch to growth investing in a heartbeat, if someone would just lend me their crystal ball for a little while. If you can consistently pick the right growth stocks, and buy and sell them at the right time, you'll trounce dividend growth investing (and most other strategies as well). But it is a nearly impossible task, and even more so for those of us with families and jobs and the such. One of the main advantages of DGI is that it is a fairly easy and forgiving strategy that can be successfully used by us mortals.
Ah that makes sense. I was reading the other day that DGI companies tend to do well as far as capital growth goes as well, since we aim to choose companies that have solid fundamentals and consistently grow their dividends (which is supported by consistent growth in earnings). What if one say, sold off a portion of their biggest growers (in terms of stock price) and used those to buy more undervalued growth stocks. Wouldn't that theoretically grow real returns over time by leveraging both the compound growth of reinvesting dividends AND the capital gains of the stocks themselves? Why not leverage both strategies?
Welcome to the forum. This theory can work, but you might need to dust off the crystal ball again. I don't do this personally since I don't want to sell my dividend payers and buy stocks that I'm hoping that will go up in price. To me, the worst thing I could do would be to sell a great dividend aristocrat like JNJ and buy the next up and comer only to see it go down in flames. Also with a family, I don't have the time to research the growth stocks and watch them constantly.