05-14-2014, 09:01 AM
(05-13-2014, 01:32 PM)WRXodus Wrote: 5o, how have you been the last couple months? I've been having the same concerns myself, and trying to find a balance between dividend and index investing while "getting my feet wet".
(05-13-2014, 04:45 PM)cannew Wrote: It's been mentioned before, but the concerns I'm hearing are from Short Term results. DG is a Long Term strategy, provided you stick with a select group of companies who have a history of paying and increasing dividends. You have to select the stocks you feel comfortable with and meet your investment goals.
Comparing to an index or market should not be a concern. Those returns are based on short term and don't reflect real dollars to the investor. Only dividends received are real, unless you wish to try the Buy Low, Sell High strategy or some other active trading strategy.
The question should not be matching market or index performance but: "Is the income from my investments growing at a reasonable rate" If the income grows so will the value of your investment, eventually.
I do not agree with most DG investors that "Comparing to an index or market should not be a concern." As I've stated numerous times it is way easier to buy the index and if total return is greater from the index, you are losing INCOME and appreciation from going with a DG strategy. This is only relevant to someone in the accumulation phase like me. Once retired, I will agree that DG is a superior strategy and you shouldn't be comparing to the index.
WRXodus: My investment dollars are split between DG and index ETFs. Mainly because in my 401k I can only hold index and mutual funds. I like this because it doesn't put all my eggs in one investing strategy. If my DG portfolio underperforms for 5 years I will switch it to index funds as well.
As far as this year goes... the S&P is around a a 3.3% return and my DG portfolio is around 6.3%. Most of the gains came in the last few months when the S&P was down or flat for the month. Some will argue that is when the DG portfolio is supposed to shine and I hope that's the case. However, it may just be a few lucky months.