Bank interest vs dividend stocks

[ken-do-nim]

Citizens Bank Online has a 4.00% APR.  My own Capital One Financial sits at 3.40%.  Stocks like JNJ (2.93% yield), KO (3.10% yield), and MCD (2.26% yield) must now anticipate growth or else our mental calculus will dictate keeping cash in savings is preferable.  It's a crazy world ain't it?  Certainly stocks like Verizon (6.82% yield) are still well above bank interest, but it's also been sinking for a while.

[NilesMike]

(03-04-2023, 07:54 PM)ken-do-nim Wrote: Citizens Bank Online has a 4.00% APR.  My own Capital One Financial sits at 3.40%.  Stocks like JNJ (2.93% yield), KO (3.10% yield), and MCD (2.26% yield) must now anticipate growth or else our mental calculus will dictate keeping cash in savings is preferable.  It's a crazy world ain't it?  Certainly stocks like Verizon (6.82% yield) are still well above bank interest, but it's also been sinking for a while.

5.15% @ Edward Jones

[ken-do-nim]

(03-08-2023, 07:26 AM)NilesMike Wrote:

(03-04-2023, 07:54 PM)ken-do-nim Wrote: Citizens Bank Online has a 4.00% APR.  My own Capital One Financial sits at 3.40%.  Stocks like JNJ (2.93% yield), KO (3.10% yield), and MCD (2.26% yield) must now anticipate growth or else our mental calculus will dictate keeping cash in savings is preferable.  It's a crazy world ain't it?  Certainly stocks like Verizon (6.82% yield) are still well above bank interest, but it's also been sinking for a while.

5.15% @ Edward Jones

Wow!  But is that a money market?  I wasn't aware they offered online banking.

[crimsonghost747]

I don't think it's a crazy world at all, if anything this is returning things to normal. The past 15 years have been crazy when interest rates have been non-existent.
This just brings the growth aspect of DGI to light, a dividend is nice but it needs to keep growing constantly (at least faster than inflation over the long-term) for the strategy to really work.

[ken-do-nim]

(03-08-2023, 01:42 PM)crimsonghost747 Wrote: I don't think it's a crazy world at all, if anything this is returning things to normal. The past 15 years have been crazy when interest rates have been non-existent.
This just brings the growth aspect of DGI to light, a dividend is nice but it needs to keep growing constantly (at least faster than inflation over the long-term) for the strategy to really work.

Your second sentence points to an interesting tangential topic.  If you take a stock like LLY, you see a terrific DGI stock, with increases from $0.74 to $0.85 to $0.98 to $1.13 in the last few years.  Now compare to MMM, whose dividend is treading water going from $1.47 to $1.48 to $1.49 to $1.50 in recent years.  LLY is the clear winner, right?  However, someone investing today gets way more bang for their buck dividend-wise with MMM because the yield is 5.36% compared to to the other's 1.30%.  I wonder what the math shows if they both continue at the same dividend increase rate how many years it will take for LLY to catch up to paying as much as MMM, but it's probably decades at least.

[fenders53]

(03-08-2023, 01:42 PM)crimsonghost747 Wrote: I don't think it's a crazy world at all, if anything this is returning things to normal. The past 15 years have been crazy when interest rates have been non-existent.
This just brings the growth aspect of DGI to light, a dividend is nice but it needs to keep growing constantly (at least faster than inflation over the long-term) for the strategy to really work.

Over half of my port is now covered put collateral collecting 4.51% in a money market whether it is employed or not.  This is about as easy as it gets for a retiree with option selling skills.  I don't even have to push my luck on close strikes for now.

[fenders53]

(03-08-2023, 01:50 PM)ken-do-nim Wrote:

(03-08-2023, 01:42 PM)crimsonghost747 Wrote: I don't think it's a crazy world at all, if anything this is returning things to normal. The past 15 years have been crazy when interest rates have been non-existent.
This just brings the growth aspect of DGI to light, a dividend is nice but it needs to keep growing constantly (at least faster than inflation over the long-term) for the strategy to really work.

Your second sentence points to an interesting tangential topic.  If you take a stock like LLY, you see a terrific DGI stock, with increases from $0.74 to $0.85 to $0.98 to $1.13 in the last few years.  Now compare to MMM, whose dividend is treading water going from $1.47 to $1.48 to $1.49 to $1.50 in recent years.  LLY is the clear winner, right?  However, someone investing today gets way more bang for their buck dividend-wise with MMM because the yield is 5.36% compared to to the other's 1.30%.  I wonder what the math shows if they both continue at the same dividend increase rate how many years it will take for LLY to catch up to paying as much as MMM, but it's probably decades at least.

That sounds good on the surface but I did my research on MMM and it will require a not so small miracle to keep the Div from taking a hard cut.  They were flailing for any growth before the lawsuits even ramped up.  It will be another high yield lesson.