A
"dividend strategy" refers to a plan or approach that focuses on investing in stocks or funds that pay regular dividends to investors. The goal is to generate income from these dividends as a part of one's overall investment strategy.
Full definition
The reason behind the excellent performance
of dividend strategies for retirees is that dividends are stable, determined almost entirely by business conditions.
Higher beta sectors have been in favor for much of this year, but investors should not turn their backs
on dividend strategies.
If those capital gains can be deferred until retirement and realized at a lower rate, the low -
dividend strategy looks even more attractive.
The takeaway As investors
consider dividend strategies, it's important to note the difference between high dividend yield strategies and dividend growth strategies.
In this example, the difference is small for Canadian stocks, but for foreign equities the high -
dividend strategy results in a tax bill 18 % higher.
The combination of a delayed purchase and a regular
dividend strategy lifts the continuing withdrawal rate to 5.4 % (plus inflation).
Lately, I have been studying periods in stock market history typically known for «poor performance» to see if it were possible to craft an
intelligent dividend strategy during that time period.
The combination of a delayed purchase and a
simple dividend strategy lifts the continuing withdrawal rate above 5 % (plus inflation).
In our opinion, low P / E, low price - to - free cash flow, and
high dividend strategies may be about to take command of this stock market.
Knowing that selling shares at depressed prices causes failure, a much better alternative would be to rely
on dividend strategies that avoid the need to sell.
The
SMID Dividend strategy seeks to provide a growing and reliable stream of dividend income from smaller domestic companies.
There are even
dividend strategies which espouse the methodology of buying companies specifically because of their payment schedules in order to balance out payments.
Declines in overall yields may result
in dividend strategies failing to provide adequate levels of income for retirees.
As we approach the presidential election and the planned expiration of the Bush tax cuts at the end of the year, we may see people steer away
from dividend strategies and focus more on total return strategies.
James Hansen, the «father of climate change awareness,» wants the same carbon fee — and -
dividend strategy proposed by Republicans
Yields in fixed income remain historically low, while within the equity space, existing high
dividend strategies tend to tilt toward low growth sectors or poor quality stocks.
Along the same lines,
dividend strategies do well because dividend income is much more reliable and steadier than capital appreciation.
This is a higher payout ratio than our typical
dividend strategy holding; however since Tobacco companies only need to reinvest a relatively small portion of earnings back in to the business they are able to pay out more of their earnings in dividends.
There are
even dividend strategies which espouse the methodology of buying companies specifically because of their payment schedules in order to balance out payments.
This strategy won't work with the stocks of companies that are cutting their dividends
Other funds diverge from the market, by nature of their investment mandates; for example, EUSC follows a Currency
Hedged Dividends strategy and obtains a low Fit score compared with our neutral benchmark.
Exhibits 3 and 4 illustrate the value and growth composition as well as sector composition of the S&P High Yield Dividend Aristocrats versus the S&P 500 ® High Dividend Index — a high -
dividend strategy built on the S&P 500.
None of our
U.S. dividend strategy indices managed to beat the S&P 500's 9.3 % year - to - date total return for the period ending on the June 30, 2017, and the S&P 500 High Dividend Index underperformed by 6.11 %.
While I have made the distinction between investments in MLPs, REITs and dividend stocks in the table, all three are an important part of a
holistic dividend strategy.