Dividends can be obtained via:
- ETFs
- Mutual Funds
- Individual Stocks
Don’t let the lure of Yield (short-term) surpass the ‘sureness’ of Growth (medium to long-term). Higher Yields mean higher Risk. Company Cash Flow is a real important criteria as well (in addition to Profit/Loss).
Note: I also added a second article from CNBC further below. Enjoy.
The case against dividend ETFs
Link: The case against dividend ETFs
Quote “High yielding stocks offer payouts that stand above dividend growth stocks, so there is some appeal in owning them. But dividend growth stocks offer a better overall package for the long-term investor. You get regular increases in your quarterly dividend payments – typically one per year – and you also get the potential for share price appreciation.”
Is your dividend plan on track? Answer these 4 questions
Link: Is your dividend plan on track? Answer these 4 questions
Extract below:
Q. Is it better to buy individual dividend-rich stocks or dividend funds and ETFs?
The best way to answer this question is by looking at the overall size of your investment portfolio, said Charles Sizemore, a financial advisor at Sizemore Capital Management in Dallas. “If your portfolio is a few tens of thousands of dollars, just buy an ETF or a few ETFs and be done,” he said. “ETFs will pay a decent yield, and the risk is so low. If you own a dividend stock or two and they blow up, it can sink your entire plan.”
Sizemore said only investors with several hundred thousands of dollars should be picking individual dividend stocks.
The ETFs are a low-cost, diversified way to own dividend-paying companies of all stripes, Morningstar’s Johnson said.
“For the vast majority of investors, one steady, high-quality, core low-cost U.S. equity income fund is more than sufficient,” he said.
Either way, it is important to remember that an ETF, even one with a high yield, is not a bond investment. “Dividend-growth ETFs can bounce around a lot,” Sizemore said. “These are stocks, not bonds.” But most of the ETFs in this category are focused on holdings that “have survived Armageddon. So they’re a valid way to play dividend growth,” he added.
