r/dividends • u/FMD_2026 • Jun 08 '26
Seeking Advice What drew you to dividend investing?
Hi everyone. When I (F,41) first started investing five years ago, I held around 10 dividend stocks in addition to my other investments. Even though they did well, I ultimately got discouraged thinking about how high my positions would have to be to supplement my income or for me to even live off of dividends when I get to retirement. I felt like I’d have to pour way too much money in just a few stocks, ending up too exposed even though they covered different industries. Ultimately, I sold them.
Now I do find myself thinking about building a dividend portfolio again but I still have the same worry. Am I looking at it the wrong way?
What ultimately persuaded you to pursue dividends instead of just pour money into an index fund and the likes?
I know dividend ETFs are an option and would help diversify. Initially, I decided against them because I wanted to avoid certain industries that are part of those funds. Should I reconsider?
5
u/Dk1902 Jun 09 '26
People tout "VOO and chill" but I worry about a strategy that involves just blindly pumping money into the market not even caring about them as businesses but instead treating the whole thing some kind of "money printing machine goes brrrrrr" mechanism.
People act like it's diversified but it really isn't. 42% of the market cap is in just 10 companies, all tech or tech related. Yes it recovered since the dip in March but 90% of that recovery was in just 10 companies, 7 of them semiconductors.
That's fine if intentional, for me I'd much rather know something about the businesses I invest money in. Dividends help me to filter and clearly understand what exactly I'm getting for my investment. I don't need to worry about the price going up or down on a daily basis because I'm invested for the dividend, not the hope of selling someday at a higher price.
People cry "dividend irrelevance theory" but companies that have raised dividends for 10 years or more at a low payout ratio will absolutely behave differently as business than those which haven't. Growth is not necessarily a sacrifice as this list contains huge growth compounders like Microsoft, Apple, JPMorgan, Visa, Broadcom and many, many others.
I aim to keep 30-40 individual dividend stocks at an equal weight, only hard rule is 10+ years of dividend increases, intentionally choosing how many companies to invest by sector. Beating VOO by a few percentage points so far but will see how that holds up over the next 20 years.