Everyone on this board wants dividends! High dividends, growing dividends, dividend ETF's, DIVIDENDS, DIVIDENDS, and More DIVIDENDS!
Trouble is in reality a stock dividend is noting more than an accounting gimmick! There is really no value in getting a dividend anymore. Yes, before people could buy and sell stocks online, dividends were helpful in creating income without the hassle of actually selling shares of stocks. But now with low or no transaction fees, there is little reason to even think about dividends. If you want income from your stocks to pay expenses, just sell shares on a scheduled basis.
Many investors think that getting a stock dividend is like getting interest on your money from a bank account. It's not! When a stock, Mutual Fund or ETF pays a dividend, the NAV (Value) of the stock will go down an equal amount than the dividend the evening before the dividend is paid. If you reinvest the investment, you come out even. If you pull out the dividend payment out of your account, you basically just did a scheduled withdrawal.
Many people who don't understand dividends will buy shares of the investment a few days before the stock is scheduled to pay a dividend and then sell it right after the dividend is paid. They think they are making money this way. They may make money if the value of the stock goes up, but that increase has nothing to do with a dividend being paid. If you could make money buying and selling within a few days around dividend payment, every hedge fund and other investors would do that and make trillions. There is no free lunch when it comes to dividends.
On the other hand, if you have money in a bank paying interest, you come out ahead every time interest is paid.
Dividends are more or less an accounting gimmick!
Submitted August 27, 2018 at 04:37AM by KillingTime56 https://ift.tt/2P5dMiK