For instance, companies that pay decent dividends >2.5% are older more mature slower growing companies. Why would someone take buy shares in an old business whose stock price will barely move just because they get 3 4 or 5% return?
In another situation, you could invest in growth stock-- which are more volatile, however we can take advantage of their dip to buy more shares-- and get more capital appreciation.
In example one lets say you buy an old company like $KO which has gone up 18% in the last year + 3% dividend lets say you get a 21% return this year (of course and exceptional year for the market and will likely not continue giving 21% due to lack of growth.
If you bought $QQQ, you would have a much higher return 34.5% in the past year (especially over the past five years blows any dividend etf out the water) but you would have missed that because it only offers .5% dividend.
It is not hard to imagine that growth stocks will continue to outperform value because of their technological innovative advantage. So are dividends just for pure psychological motivation to keep the investor investing? Because he can yield that and then some in capital appreciation. As stated qqq up 34% this year, thats like getting a 34% dividend yield! I can sell as much as I want and spend it anything-- just like a dividend, so whats with all the bruhaha regarding divies?
Submitted August 15, 2021 at 05:22AM by LavenderFish https://ift.tt/2XuR8Kj
