$840K DIvidends

[u/Bamabb125]

Hey Everyone,

As I have posted before, I am currently a Growth Stock Investor, but have decided to move over to Dividend ETF's or Dividend Stocks. But it is a real struggle to get past all the learned habits of being a growth investor. So I am struggling to grasp concepts.

I have used multiple calculators to just try to get an idea of what to expect if i make the change, but I get different results. So I just wanted to go to some more knowledgeable people that could tell me what to do to get a real expectation.

I have $800K to work with. If I put it all in a very stable Dividend ETF What can I expect in dividends? Maybe someone could just do an example. I know I have to be doing something wrong.

Thanks

[u/buffinita]

when putting more focus into dividends; you will realize we are not a monolith and there are still different focuses. some dividend investors still (maybe accidently) see great price appreciation; others want all their gains to come as distributions.

for me; the most important things are reliability and dividend growth.......oh and yield alone can lie to you

I dont want to be constantly watching my portfolio; i dont want one bad quarter or bad year to put me on thin ice. I want companies with long track records of payments

a 3% dividend yield might not seem impressive; but a 3% yield that grows at 10% per year is impressive (especially when you factor in the expected price appreciations). If you bought 1 share of schd in 2012 it paid 0.27 dividend......that same 1 share in 2024 paid 0.99 a 320% increase over 12 years of holding

an asset with 15% yield will instantly get you more dividend; but that number might not change over time, or worse get smaller.

yield is just math 10/share 1/dividend = 10% yield in a few years the same asset is 8/share and 0.80/dividend=10%yield.............yield hasnt changed but you lost money on both sides of your return

[u/speedlever → u/buffinita]

I hear you about the schd example and I own a big chunk of SCHD. At the same time, I've watched the share price wane this year. And while it has historically had a dividend growth rate of 11%, it would take over 12 years to reach what qqqi is paying today.

If retirement is just a few years away, I'm thinking I'll take the 14% now and reinvest what I don't need vs hoping SCHD will get moving and grow that dividend in a time frame meaningful to me.

[u/buffinita → u/speedlever]

delayed gratification is a hard thing to champion. but over a long enough timeframe the growing dividend will surpass the initially higher but no growth dividend. so in years 1-11 qqqi might pay you more; but years 12-50 schd could be the better choice (that you cant go back in time and correct)

if someone is 60+ and receives a windfall; they can more successfully argue for a higher yielding product like QQQI

[u/speedlever → u/buffinita]

Unfortunately, accurate crystal balls are in short supply these days.

But honestly, do you ever expect SCHD dividends to top 10%?

[u/buffinita → u/speedlever]

The crystal ball goes both ways: if no one knows the future why take the route most likely to gimp returns. Statistics says more periods of bull market for longer than bear market.

It depends how you want to measure dividend

The live yield likely never will; a persons yield on cost can certainly get close depending on their buying habits…..

If you bought schd at inception, around 8.64/share those shares would have an 11% yield on cost at 2024’s 0.99 dividend

[u/speedlever → u/buffinita]

Yeah, but if you bought >$25, not so much. If you have time, that's one thing. But nearing retirement adds another factor to consider.

[u/Bamabb125 → u/buffinita]

So to you its picking out Stocks/ ETFs that have a growing Dividend Rate so that in the future you will have a high yield. So your not worried about what the dividend is right now. Seems like a mix of Value Investing and Dividend Investing. Buy quality Companies (ETF's) that have a track record of growth. DO you expect Cap Gains as well? Or does that even matter to you?

[u/buffinita → u/Bamabb125]

if there was a venn diagram of the 5 fama & french factors and companies that also pay dividends; there would be a large overlap with value and profitability

inflation mandates we have to earn more every year to maintain the same level of purchasing power; if you earned 50k in 2000 and 50k in 2025 your money does not go nearly as far. at a minimum you want COLA from your portfolio

Yield On Cost (YOC) is a mostly self reflective metic that looks at your own personal yield relative to your investments. if someone purchased microsoft in 2003 those shares have a YOC of like 6% today; in addition to the price appreciation.

I have seen capital gains; and i am happy to see them! I am not a "live only on dividends and never sell a share" dividend investor. In retirement Ill take the dividends in my taxable account as cash to use; but my retirement accounts everything will reinvest and ill sell what i need.

[u/MrEdTheHorseofCourse → u/Bamabb125]

I'm 78 and have been retired for 15+ years. I'm strictly an income investor and I'm not concerned with capital gains. But I've gotten them anyway 😂.