In this insightful video I go over the dividend fallacy theory, which helps explain why dividends are NOT free money. Chat with me on my free Dividend Discord chat server ➜ Follow me on Instagram ➜ Follow me on Twitter ➜ My Seeking Alpha Affiliate Referral Link: Seeking Alpha currently has a sale running where new people can sign up to their premium membership for only $99 for the 1st year (starting with a 7-day free trial that you can cancel) vs the normal $239/year that I've paid for years. They mentioned that they would probably be changing this offer soon, so verify what they’re offering if you try my link. I literally won’t buy or sell a stock anymore without first checking out the articles & comments section on Seeking Alpha. 0:00 Intro 0:30 The Free Dividends Fallacy TLDR 1:16 Caterpillar dividend impact on price 2:40 How the ex-dividend price drop is sometimes countered 2:56 Dividend yield Net (or Shield) 3:29 A key point the Dividend Fallacy authors are wrong about (aka why dividends are better than share price appreciation) 4:40 Investors are less likely to sell stocks that pay dividends 5:10 Dividend Stocks have tended to outperform non-dividend stocks 5:30 Some dividend investors don’t pay appreciation to stock price appreciation (or only on yield) 6:02 Some investors only focus on total returns 6:22 Dividend demand is higher when interest rates are low 6:50 Total return should be a key factor in what you do 7:36 Demand for dividend stocks goes up if they are more stable 7:47 Demand for divs are lower when recent market returns are higher 8:13 Chasing dividends at the wrong time can cause you to underperform 9:00 Dividends are not guaranteed 9:18 Dividends can come at a company’s opportunity cost 9:37 Investors tend to hold div paying stocks longer regardless of performance 10:00 Some investors don’t factor in dividends when looking at returns 10:20 Some famous finance professors are big dividend advocates: Dr. Jeremy Siegel 11:05 Invest being aware of your own biases 11:13 A Fidelity paper pumping up dividend stocks 12:00 Most investors don’t drip into the same stock (which actually pumps up non-div stocks) 12:10 How the majority of returns come from reinvested dividends 12:50 Other things I love about dividends 13:15 Everything has pros/cons. Just invest intelligently. 13:25 Dr. Siegel explaining how stocks outperform other asset classes 14:35 Thus dividends are not free money, but are still awesome 😊 15:09 Shoutout/Outro Support me & get Patreon perks ➜ To get access to my Dividend Spreadsheet product then please sign up as a Patreon Aristocrat or King (I only have limited seats available). You also get other perks for signing up including the ability to watch my videos before I release them to the public, and you get to vote on what thumbnail I should use for my video, plus you’ll see when I buy or sell stocks, and you gain more direct access to me. Please LIKE, COMMENT and SUBSCRIBE to support this channel - it helps me immensely! Also, please SHARE this video with your friends :) Thanks, I really appreciate it! Get more great info - Subscribe! ➜ Share this Video ➜ Watch this Video next ➜ Attributions/SEO/Useful Links: The Dividend Disconnect: Dividend-paying stocks represent the only protection against inflation: Wharton's Jeremy Siegel, CNBC Television The long-term case for stocks, with Jeremy Siegel, Bank of America Disclaimer: I am not a financial adviser. These videos are for entertainment, inspiration, and educational purposes only. Investing of any kind involves risk. I am only sharing my opinion with no guarantee of gains or losses on investments. Please consult an appropriate adviser and do your own research before making any decisions on anything. I am not responsible or liable for any actions you take. The data shared may be inaccurate. Copyright © 2023 GenExDividendInvestor. All rights reserved. #dividends #dividendgrowthinvesting #passiveincome...(read more)
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Dividends are often touted as "free money" by investors, but this is a fallacy that can lead to poor investment decisions. The reality is that dividends are not free money and should not be the sole reason for investing in a particular stock. The Dividend Fallacy Dividends are a portion of a company's profits that are distributed to its shareholders. By receiving dividends, investors can earn a steady stream of income from their stock holdings. However, some investors view dividends as free money that is paid out to them, regardless of the performance of the underlying company. This is a fallacy because dividends are not free money. The money that is paid out as dividends comes from the company's profits, which could have been used to reinvest in the company to drive future growth. By paying out dividends, the company is essentially signaling that it is not able to identify any growth opportunities that would provide a higher return on investment than distributing profits to shareholders. The Risks of the Dividend Fallacy The dividend fallacy can lead investors to make poor investment decisions. For example, if investors are solely focused on receiving high dividend payments, they may invest in companies that have high dividend yields but weak financial fundamentals. These companies may be at risk of cutting or suspending their dividend payments if their financial performance deteriorates. Furthermore, companies that prioritize dividend payments over reinvesting profits in their business may stagnate over time. They may struggle to grow and innovate, which could lead to declining stock prices and reduced earnings for investors. Investing for Total Returns Rather than focusing solely on dividends, investors should consider the total return of their investments. Total return includes both capital appreciation (the increase in stock price) and dividend payments. Some companies may have low dividend yields but strong growth prospects, which could result in higher total returns over the long term. Investors should also evaluate a company's financial health, including its profitability, cash flow, and debt levels. By investing in financially healthy companies with strong growth prospects, investors may be able to achieve higher total returns over time. Conclusion Dividends are not free money and should not be the sole reason for investing in a particular stock. By falling into the dividend fallacy, investors may make poor investment decisions and miss out on higher total returns. Instead, investors should focus on the financial health and growth prospects of companies to make informed investment decisions. https://inflationprotection.org/why-dividends-are-not-free-money-debunking-the-dividend-fallacy/?feed_id=100549&_unique_id=646d26b3b6b12 #Inflation #Retirement #GoldIRA #Wealth #Investing #DAVIDH.SOLOMON #dividenddisconnect #dividenddiscord #dividendgrowthinvesting #dividendinvesting #dividendstocks #dividends #howtoinvest #investingdiscord #jeremysiegel #passiveincome #SAMUELM.HARTZMARK #SeekingAlphaAffiliateReferralLink #Stocks #TheDividendFallacyWhyDividendsareNotFreeMoney #totalreturns #whataredividendstocks #TraditionalIRA #DAVIDH.SOLOMON #dividenddisconnect #dividenddiscord #dividendgrowthinvesting #dividendinvesting #dividendstocks #dividends #howtoinvest #investingdiscord #jeremysiegel #passiveincome #SAMUELM.HARTZMARK #SeekingAlphaAffiliateReferralLink #Stocks #TheDividendFallacyWhyDividendsareNotFreeMoney #totalreturns #whataredividendstocks
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