Why Investors Love Dividends (And Why They Can Be Dangerous)

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  • Опубліковано 19 лип 2018
  • Ever wonder what all the hype around dividends is? With today's video, we'll dive into how dividends work, why people like them so much, and what to look out for when hunting them down.
    Intro/Outro Music: www.bensound.com/royalty-free...
    Episode Music: freemusicarchive.org/music/Pod...
    DISCLAIMER:
    Richard does not have a personal position in any of the referenced companies. This channel is for education purposes only and is not affiliated with any financial institution. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.

КОМЕНТАРІ • 669

  • @superpowerfulmagnets
    @superpowerfulmagnets 4 роки тому +957

    I'm just a humble dividend farmer tending to my stocks.

  • @rogernevez5187
    @rogernevez5187 5 років тому +2336

    > "Why Investors Love Dividends"
    The same reason why landlords love rents.

    • @rokyericksonroks
      @rokyericksonroks 5 років тому +149

      If the funding source of the dividend is not coming out of cash flow produced by operations, then it might be better to NOT receive a dividend. Some companies will resort to tomfoolery in their accounting just to deliver a “dividend” to shareholders. It masks poor performance and can hurt you later on down the line. A legitimate dividend? Bring ‘em on! We love them.

    • @notbrad4873
      @notbrad4873 5 років тому +27

      Ty for saving me 8 mins

    • @ErickaWilliamsCC
      @ErickaWilliamsCC 5 років тому +7

      bingo. I love the first of the month. Those direct deposits are lovely.

    • @Ndasuunye
      @Ndasuunye 5 років тому +3

      @D Mack but that is pretty tough if you are self-employed. How do you even place independent stocks in a retirement account. I thought you had to buy a bundle of stocks (sort of like an ETF) when creating your retirement account(s)?

    • @bentaylor1375
      @bentaylor1375 4 роки тому

      Roger Nevez I

  • @hyouzanren1846
    @hyouzanren1846 5 років тому +1408

    if they borrow money to give you dividend...sell the stocks fast!

    • @rokyericksonroks
      @rokyericksonroks 5 років тому +97

      hyou zan ren
      Sounds like you were holding GM shares.

    • @elijahschnake3863
      @elijahschnake3863 5 років тому +40

      That's standard operation procedure in Australia.

    • @leonschallenberg
      @leonschallenberg 5 років тому +89

      So sell mcdonalds and Coca Cola right now? Maybe you should rather look out for What made them pay dividend out of them borrow money to pay dividends. Coca Cola and MCD for example repurchased tons of shares so they did not have enough cash flow to pay dividends. Yet they still did since they are dividend aristocrats

    • @jminkvihubyb
      @jminkvihubyb 5 років тому +3

      @@leonschallenberg sell brkb before selling those

    • @stangtrax
      @stangtrax 5 років тому +9

      Dividend EPS payout ratio and dividend cash flow payout ratio are important.

  • @DavidAntony-gq7id
    @DavidAntony-gq7id 9 місяців тому +219

    Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.

    • @harrisonjamie794
      @harrisonjamie794 9 місяців тому

      As you plan your retirement, be sure to
      talk with a financial advisor who can help you make the most of your retirement investing scheme.

    • @DavidAntony-gq7id
      @DavidAntony-gq7id 9 місяців тому

      @@harrisonjamie794 Very true, If you're looking for help
      building a retirement nest egg, you most likely want a certified financial planner with expertise in retirement planning. With the aid of a coach, I grew my reserve from $160k to almost $600k during this Red season.

    • @harrisonjamie794
      @harrisonjamie794 9 місяців тому

      @@DavidAntony-gq7id How can one find a verifiable financial Planner, I buy the idea of employing the services of a Financial Advisor because finding that balance between saving and living requires counsel.

    • @DavidAntony-gq7id
      @DavidAntony-gq7id 9 місяців тому

      @@harrisonjamie794 KRISTIN GAIL CUNNINGHAM. On the internet, that’s the financial advisor I use. She’s verified; you could also read more about her and then communicate with her. it’s always good to do your research before putting your money into any investment.

    • @harrisonjamie794
      @harrisonjamie794 9 місяців тому

      @@DavidAntony-gq7id Thank you so much! Found her webpage and left a message. Hopefully, she responds.

  • @augustinwai6399
    @augustinwai6399 5 років тому +319

    A falling share price is not necessarily indicative that the company is in trouble. Mr. Market is known to be irrational as pointed out by Benjamin Graham and a falling share price may be a chance to buy a great dividend stock at a discount. For dividend safety, it's important to see if it's sustainable by looking at the payout ratio from earnings, cashflow, etc depending on the company. A low payout ratio indicates room for the dividend to grow as well as making it more likely that the company can continue to pay a dividend.

    • @ThePlainBagel
      @ThePlainBagel  5 років тому +76

      Very true! I agree that a lower price does not mean that a stock is impaired, payout is a great way to check the pulse of a company's dividend yield.

    • @DanielCruz-ol4sw
      @DanielCruz-ol4sw 4 роки тому

      Augustin Wai kk

    • @MrMineHeads.
      @MrMineHeads. 3 роки тому +5

      Trouble is, markets are rarely too irrational. Markets, for the vast majority of cases are efficient. Falling share prices are indicative of a company that is failing.

    • @joonatuominen7844
      @joonatuominen7844 2 роки тому +3

      @@MrMineHeads. eh, if all other pointers say otherwise its more likely just a market correcting an overestimation of a stock price

    • @zvxcvxcz
      @zvxcvxcz 2 роки тому +7

      @@MrMineHeads. I would disagree. I mean, I would probably grant that they're long term efficient, but the frequency of irrational trader behavior is far too high for me to ever agree that markets are truly fundamentally efficient. It's a good enough approximation if you're diversified and long, but anyone putting down all their money on GME at highs during the Gamestop nonsense under the assumption that the market had efficiently determined an appropriate price would have been an idiot. That kind of activity pops up over and over and over again. Even at the level of market risk, we call them bubbles in that scenario. And popped bubbles don't mean a company is necessarily failing.

  • @christodang
    @christodang 4 роки тому +35

    One thing to watch out for which the video briefly touches upon is the taxation. Unqualified dividends in the US are taxed as income, so while you may end up reinvesting the dividend in more stocks, to the IRS, you've been "paid" so you'll owe taxes on that dividend. This may mean a bigger tax bill at the end of the year and depending on your tax bracket, might be something to take into account (vs a capital gains tax which you can control by controlling when you sell the stock).

    • @mmmbiscuits1211
      @mmmbiscuits1211 Рік тому

      DRIP is tax free*

    • @louisphily1
      @louisphily1 10 місяців тому

      @@mmmbiscuits1211 It depends on the type of dividend, but most of them are not tax free in the US

    • @mmmbiscuits1211
      @mmmbiscuits1211 10 місяців тому

      I live in the USA. Dividends are tax free when you sign up for DRIP. If you just take the dividends they are taxed at 15.1% on the 1099-div IRS form. @@louisphily1

  • @WilliamChan
    @WilliamChan 3 роки тому +56

    This is exactly why it's a good idea to have some portion of cash on the side ready to put into proven sustainable dividend paying companies during a downturn, when they are at a discount. High yields aren't inherently bad, but they aren't the independent variable and you shouldn't be basing your ultimate decision on yield alone

    • @asylumfinance2750
      @asylumfinance2750 2 роки тому +4

      Actually, you’re probably better off doing the reverse. The bounce up is much higher w/ speculative companies.
      Theoretically, if you thought you could time the market, you’d shift to low beta (blue chips) during the good times to get a relatively mild fall. Then you’d tilt towards speculative stocks for the bounce up.
      The above said, you should almost certainly NOT try to time the market.

    • @midn8588
      @midn8588 Рік тому +3

      Timing the market is generally a dogshit strategy and you're pretty much always better putting money in every month unless you have perfect market information (you don't)

  • @anonuser12345
    @anonuser12345 4 роки тому +60

    I have been building a dividend portfolio for quite a few years now and am starting to see the compounding, it's great. I make about $1100 a month in dividends which go straight back in to buying more dividend stocks. In Canada there are a lot of great dividend companies to choose from.

    • @starmorpheus
      @starmorpheus Рік тому +3

      @Josh Landon Just look up the "Dividend Kings" and "Dividend Artistocrats" list. Pick stocks that you like, and build a portfolio.

    • @e.d.t432
      @e.d.t432 Рік тому +1

      @@joshlandon3327 HYLD
      13.25% (rn I think?) An etf made up of mostly US stocks, so you get a high yield, low volatility, exposure to the US market on a TSX ticker, and if it's in your TFSA, no tax on those dividends

    • @jimmyjazz2063
      @jimmyjazz2063 11 місяців тому +1

      @@e.d.t432 covered calls are super risky investments. The dividends are paid out from the sale of call options, which is VERY different from a profitable paying out excess cash flow

  • @DavidAWA
    @DavidAWA 4 роки тому +37

    My friend was telling me the wonders of a high dividend stock . . . in a gold mine. Like, literally, a gold mine.
    When the mine went dry, it was all gone.

  • @beaviswealth
    @beaviswealth 5 років тому +142

    Outstanding video, Richard. Wow!

  • @Asstronauts93
    @Asstronauts93 5 років тому +185

    this video is also assuming you dont add any extra of your own money. when you combine your own money each month plus dividends it gets great!

    • @Asstronauts93
      @Asstronauts93 5 років тому +15

      @Erick Payan im gonna put my eggs in 20 baskets lol!

    • @impactodelsurenterprise2440
      @impactodelsurenterprise2440 5 років тому +13

      Put all your eggs in 10 baskets but not 100 baskets.

    • @campkira
      @campkira 5 років тому +1

      Not everyone own company just to want money back.

    • @DeadSeriousOfficial
      @DeadSeriousOfficial 5 років тому +3

      Exactly! The real goal is to eventually buy enough to get another share and use anything left to fund a new investment. Currently have 5 drips 2 of the buy multiple shares each month. Just bought 10 shares of Foot Locker on a 20% dip. Any stocks your looking into or that hold a big portion of your portfolio?

    • @googleuser9383
      @googleuser9383 3 роки тому +2

      Imagine what would happen once you realite why the other stocks are called "growth stocks".

  • @EricSmyth2Christ
    @EricSmyth2Christ 5 років тому +392

    The strongest force in the universe? Money that compounds on itself."
    -Albert Einstein

    • @theamici
      @theamici 4 роки тому +55

      Einstein was talking about compound interest in general, the quote doesn't specify money as you indicated. For example, gravity has compound interest effect for mass. The more mass you have, the stronger becomes your gravitational attraction, and so you accumulate more mass per unit of time. Like compound interest, this accelerates your accumulation in a passive fashion.

    • @Biconnecc
      @Biconnecc 4 роки тому +5

      @@theamici Like a black hole that keeps eating matter around it?

    • @johnnyguerra5976
      @johnnyguerra5976 4 роки тому

      A Human-Centerd Capitalism to combat Economic Automation. Its about time we ballout the American People. Americans know how to best spend their money. What if, put a $1000 DIVIDEDS a Month in every Americans hands.
      Democrat, Andrew Yang
      He Branded " Socialism " PERFECT

    • @dylanhecker6686
      @dylanhecker6686 4 роки тому +7

      @@theamici are you saying someone miss quoted Einstein on the internet? No way

    • @googleuser9383
      @googleuser9383 3 роки тому +1

      What einstrein didn't get was "stonks only go up. LOL"
      Check it out. There are stocks that reach a new all time high every few days.

  • @CossacKING
    @CossacKING 3 роки тому +8

    Excellently explained! I've been researching dividend stocks to invest in and this helped clear up a few deep seated questions I had like the consequences of high pay ratios, dividend cuts, high dividend yields etc. Very helpful

  • @TheDividendExperiment
    @TheDividendExperiment 5 років тому +46

    First time I have seen this channel, very high-quality production, good video! I love dividends too

  • @jpsuazo8083
    @jpsuazo8083 5 років тому +19

    this channel is extremely underrated

  • @user-ww6ii6zn8m
    @user-ww6ii6zn8m 5 років тому +28

    "Why Investors Love Dividends"...MONEY

  • @BryanHo
    @BryanHo 4 роки тому +56

    I love dividends. I usually reinvest them so essentially I get a raise every quarter (or month) for doing nothing.

    • @joelman1989
      @joelman1989 4 роки тому +18

      Bryan Ho that’s basically what investing is though. If I invest $10 and the company grows by $2, I have $12. I’ve just made two dollars. If you invest $10, the company grows by $2, and you get $1 back as dividend which you then reinvest, you are at $12. We are at exactly the same place. This is a gross oversimplification but basically you should be focused on total returns not dividends. Dividends are an important part of any portfolio but to invest exclusively in stocks that pay them is to ignore an important part of the market for what basically amounts to accounting differences.

    • @davidbrooks8809
      @davidbrooks8809 11 місяців тому

      You do know that dividends is not extra money

  • @BenFelixCSI
    @BenFelixCSI 5 років тому +21

    Nice video, Richard. My concern with dividend-focused strategies is that they typically end up ignoring parts of the market like small and mid caps. I guess if you can pick the right dividend stocks it might not matter much.

    • @ThePlainBagel
      @ThePlainBagel  5 років тому +11

      Totally agree, I am actually far from an advocate of dividend-only strategies. The video was more so a commentary on why some people go that route, but as with every strategy there are pros and cons!

    • @BenFelixCSI
      @BenFelixCSI 5 років тому +5

      The Plain Bagel got it. Excellent primer!

  • @uglyaa9024
    @uglyaa9024 5 років тому +11

    Very great! Very informative while being easy to understand. Can't wait to see this channel grow!

  • @vikramsingha2312
    @vikramsingha2312 5 років тому +2

    Well done Richard, explained the topic in a simple but comprehensive way...also the editing was great!
    Happy to subscribe to your channel :)

  • @lorenzzoklein9178
    @lorenzzoklein9178 4 роки тому +6

    So much knowledge for a French. In France, no one talks about finance nor stocks. It’s incredibly the wealth you can build with finance.
    That you, English speaking people for sharing your knowledge for free !

    • @rhythmandacoustics
      @rhythmandacoustics 4 роки тому

      What do they focus on in France? Existentialism? Your president was a former banker.

    • @lorenzzoklein9178
      @lorenzzoklein9178 4 роки тому +1

      @@rhythmandacoustics Money is very taboo in France.

    • @rhythmandacoustics
      @rhythmandacoustics 4 роки тому

      @@lorenzzoklein9178 do the gillet jaune people know what is going on right now economically?

    • @lorenzzoklein9178
      @lorenzzoklein9178 4 роки тому

      @@rhythmandacoustics I don't think many people know because economics are not taught for everyone in high school.

    • @rhythmandacoustics
      @rhythmandacoustics 4 роки тому

      @@lorenzzoklein9178 insanity!

  • @robertmelvin7908
    @robertmelvin7908 5 років тому +5

    I love getting dividends from my mutual funds, whether it's annual, quarterly or monthly, and then there are end of year bonuses - it's Christmas, it's Christmas, it's Christmas.

    • @erikrungemadsen2081
      @erikrungemadsen2081 3 роки тому +2

      My grandma bought me different Dividend stocks when i grew up just 3-10 shares for every birthday. I remember when i learned
      to read it was so cool to get those dividend letters in the mail. I felt so adult, recieving grown up mail every month (Windowed envelopes).
      now every dividend reminds me of grandma, that sneaky old lady.

  • @TheIcelandicInvestor
    @TheIcelandicInvestor 4 роки тому +29

    I like companies that have the ability to retain and compound earnings at high rates, instead of paying me dividends that get taxed and I have to go to the trouble of finding a new way to invest the money.

    • @TheIcelandicInvestor
      @TheIcelandicInvestor 3 роки тому +1

      @@jacklan4103 Haha yeah, they have to have the extra money, that's true.

  • @ErickaWilliamsCC
    @ErickaWilliamsCC 5 років тому +27

    -Albert Einstein 8th wonder in the world is compound interest. We either learn it or ruled by it. or Rule of 72 is good here too. Folks love dividends, passive income for those who like "security".

  • @aiyengar
    @aiyengar 5 років тому +36

    There are also a ton of problems with this strategy: (1) 60% of us and 40% of intl securities don't pay dividends -- this reduces your portfolio diversity. (2) the dividend payout and earnings growth come out of the same pie -- so if your strategy is to simply reinvest the dividends what did you gain? (3) worse, you're forced to end up paying taxes on the dividends instead of having the advantage of holding and only selling the shares at a time that has a more favorable tax treatment for you

    • @BigHenFor
      @BigHenFor 4 роки тому +6

      Always diversify your portfolio to hedge your bets.

    • @rahulbansode1537
      @rahulbansode1537 Рік тому +4

      If no gain then why feel good when dividend come?

    • @jaym8908
      @jaym8908 Рік тому +7

      You can always choose companies that both appreciates and gives dividend . A number of things can happen 40-50 years from now. You could be incapacitated by health issues and not be able to sell your CG stocks for income. There could be an event which causes the share prices to crash and you may not get the Capital Gain that you wanted for your immediate expense when liquidating the stocks. Relying on dividends for continuous income stream will help minimize tinkering with your portfolio at the age of 70. Paying more taxes now is not the end of the world and you can always create accounting structures to minimize present tax .
      I don't see any point in owning stocks that does not provide regular dividends. It would be like buying a rental property and receiving no rental income but waiting on capital growth to for income 20-30 years from the time of purchase. Investing = The productive use of money to obtain regular income. Relying on CG only is speculation.

  • @romearnold7276
    @romearnold7276 4 роки тому +2

    BIG thing to consider for dividend stocks is the neat trick you can do within a Roth IRA:
    While you have to pay tax on dividend reinvestment held in a traditional brokerage (and thus a slight cash-flow consideration), dividends in a Roth IRA are not taxed = MORE SNOWBALL

  • @cheydinal5401
    @cheydinal5401 4 роки тому +81

    Wow, buying a part of a company for - wait for it - the *profits* and not for speculation. Really unorthodox

    • @rohangangar6210
      @rohangangar6210 4 роки тому +3

      RIP Bitcoin

    • @bibo2728
      @bibo2728 4 роки тому +4

      You know speculation in stocks really comes down to speculating how much profit the company earns in its lifetime right?

    • @cheydinal5401
      @cheydinal5401 4 роки тому +6

      @@bibo2728 Theoretically it should. Well, kind of. You can also short-term speculate on how others will invest in it, and if you expect stock prices to go up because people have been fooled or fooled themselves, you win. Even if the company won't produce profits.

    • @crimsonstrykr
      @crimsonstrykr 3 роки тому +1

      @@cheydinal5401 I agree here. I think most people nowadays speculate on others trading trends rather than long term prospects of the company i.e. $GME

    • @nicyoung7228
      @nicyoung7228 2 роки тому

      @@bibo2728 The problem right now is that people don't know a single thing about most of the companies they invested in ... they only follow the herd and pray for a rising price. They don't know about balance sheet or about futur prospect for the company.

  • @tylerbradfield9981
    @tylerbradfield9981 2 роки тому +1

    These videos are the cold splash of reality I really need to be smart with my money and *not* do something stupid. Thanks a lot Plain Bagel :)!

  • @nvt6781
    @nvt6781 2 роки тому +3

    Nice presentation! As a self employed contractor, I like growth stocks (GS)better than dividends paying stocks because you have to pay tax same year you got dividends (instead of pay tax when you sell growth stocks). I sell stocks to supplement my income. Some year I made almost nothing and another year I got good paid. The ability to spread out the income to reduce some tax is definitely plus for GS

  • @Hurtzilla
    @Hurtzilla 5 років тому +24

    Starting to love this channel

  • @Gemikoni
    @Gemikoni 4 роки тому

    Help I am just a teenager stumble across to this video and now i am hooked with this channel and the stock market.

  • @Denny_Dust
    @Denny_Dust 5 років тому +137

    You deserve way more subscribers... the fact that videos from Cardi B are much more popular than educational videos is a problem.

    • @tapwater424
      @tapwater424 5 років тому +26

      we live in a society

    • @Dankyjrthethird
      @Dankyjrthethird 5 років тому +10

      Don’t jinx it man, we want ppl to stay ignorant, can’t have everyone making smart financial decisions or the smart ppl would make less
      Broke bitches stay broke and complain, hustlers like us stay educating ourselves and making this money

    • @YeetxBoi
      @YeetxBoi 5 років тому +7

      @@Dankyjrthethird and you suffer from greed, we should wish for better for everyone. The world would make more money together if we could educate people better on things like this. Economic growth> a small percentage of population making alot of money

    • @AzazelHash281
      @AzazelHash281 5 років тому +5

      TheDankLord but more people in the market
      More cash flow in the market

    • @MusicForTheBroken
      @MusicForTheBroken 5 років тому +1

      Investments are very subjective. Taking the advice of someone without a FiNRA license is just plain foolish.

  • @SBVCP
    @SBVCP 5 років тому +11

    The thing about shares, is the risk though. In general they are nice, but for them to have a competitive return, you need to be really into it and active. Otherwise, renting properties may yield more.
    Ah, but if you know what you are doing and invest in startups in just the right time, then sell again at the right time..!

    • @infintecatvids8860
      @infintecatvids8860 4 роки тому

      That’s so much work tho....

    • @joelman1989
      @joelman1989 4 роки тому

      This comment gave me anxiety lol. No evidence to suggest renting properties gives higher yield than stocks. You’d have to own properties in every country in the world to have the diversification you would need to come close to competing with stocks with just real estate. No one knows enough of what they are doing to invest in start ups at just the right time to consistently make money that way. Those that make money off of start ups consistently are very rich, they have enough capital to get hit with many failures before stumbling on a winner. Basically if you have enough dice to roll, you’ll eventually get a six. That doesn’t work if you have 1 dice to roll. If you only have $100,000 to invest, investing it into 1 extremely risky investment like a start up is almost certainly going to lead to you losing your money. If you have $1 million to invest, you can invest in $1,000 start ups, increasing the probably they you’ll land on a winner. This is how VC companies make money. For the average person this is not a good way to invest money.

    • @SBVCP
      @SBVCP 4 роки тому

      @@joelman1989 sadly, yes

  • @pipebliss
    @pipebliss 5 років тому +7

    Excellent video, clear and to the point.

  • @JJs_playground
    @JJs_playground 5 років тому +1

    Liked and subbed. I like the way you explain things and the fact that you have Canadian content is a bonus since certain rules differ between the U.S. and Canada.

  • @Unclebuns72
    @Unclebuns72 4 роки тому

    Great fun easy to understand!
    Thank you! What about aristocrat dividends? I’m thinking of getting some of those. And where should I look to find dividend history data on companies?

  • @Quantum789
    @Quantum789 5 років тому +27

    REIT and telecommunications are also good for them sweet sweet dividends IRM and VZ come to mind

    • @venictos
      @venictos 5 років тому +2

      I like VNQ and VYM. I own a few individual stocks but ETFs allow me to sleep better at night.

    • @jonathanhoe5587
      @jonathanhoe5587 5 років тому +3

      @@venictos My favorites are VCIT and PSA. Russian telecom giant MBT is a great, relatively little known among American amateur investors, high div. yield company

    • @tommy35ss
      @tommy35ss 5 років тому +3

      Just be aware they are not qualified dividends if they are a REIT, so it counts as taxable income

    • @jeremyandrews3292
      @jeremyandrews3292 5 років тому +1

      Unless it's Frontier Communications (FTR). First stock I ever bought... and possibly the last. It was a telecom stock with a good dividend, and I was interested in their performance because they took over Internet service from Verizon in my region. The transition was rough, but after several months, everything was back to normal. So I figured as people realized their service wasn't that bad after all, they'd stop losing customers, Apparently first impressions count for a lot though, and the company didn't have the best reputation in the pre-fiber days, so people just irrationally hate them now. A lot of former Verizon customers are basically angry that that they got forced into a contract with Frontier against their will that they can't terminate without a fee, and tend to switch out of spite.

    • @philiptran617
      @philiptran617 4 роки тому

      T and VZ are the way to go. CMCSA and DIS are looking good too.

  • @danteshammer
    @danteshammer 4 роки тому

    8 minute video equal to 1 semester of college. so much knowledge dropped that was also super easy to understand

  • @SpicerCapital
    @SpicerCapital 5 років тому +25

    This is very well done, Richard.
    A very comprehensive dividend primer!

  • @diogovieira8524
    @diogovieira8524 4 роки тому +15

    Fábio Holder ✌🏻

  • @kevinjacob2044
    @kevinjacob2044 4 роки тому +1

    I rarely comment on videos. Great video, learned a lot more than what I came looking for.

  • @bradleytaylor8009
    @bradleytaylor8009 Рік тому +1

    I fell into this trap a few years ago. I'm fairly young so I have only been investing since 2019. I was only interested in the dividends of a company and I found a company that was making dividend payments of 14% annually which meant with my 2500$ I was going to be making approximately 1$ per day. This was incredible until the energy sector took a massive hit in 2020. The company cut their dividend to 0% and the price fell from around 20$ to 3.10$ in less than a quarter. It has since rebounded and started paying a 1.6% ish dividend but is now one of the least productive holdings I have.

  • @saltyplayer7704
    @saltyplayer7704 5 років тому +5

    i have been dividend stock for 2 years every times the stock drop down i used all dividend to cover the drop as long as the dividend still their in 10 years my stock is cost 0$ to me.

  • @schlab73
    @schlab73 4 роки тому +1

    One big issue with dividends is asset location since they tend to be taxed higher than capital gains.

  • @parishwolfe
    @parishwolfe 5 років тому

    This is my favorite youtube channel! Thank you for making awesome videos!

  • @hectorsanchez3003
    @hectorsanchez3003 5 років тому +2

    Great video! You have caught my interest.

  • @michelemartins3136
    @michelemartins3136 4 роки тому +4

    Great vídeo! I came from canal do holder.

  • @nobodynobody993
    @nobodynobody993 3 роки тому

    You have the best explanations I find recently, thank you

  • @harshrajjadhav940
    @harshrajjadhav940 3 роки тому +1

    How to find good dividend stocks?
    1. Check the list of companies who have increased their dividends for atleast 15 years. MarketBeat has a decent screener to get started.
    2. Now short list the ones with attractive yield. (You just don’t want them to be too low where any increase is meaningless)
    3. Check the payout ratio with respect to profits and free cash flow. You want these to be ideally under 65 percent.
    4. Now look if the profits and revenue(both) are increasing or atleast stable. Minor decreases should be justifiable and not common.
    5. Ask yourself if you see the company doing well after 5-10-15 years. You don’t need to be 100 percent correct here. Our goal is to remove the obvious outliers.
    6. Reinvest your dividends as much as possible.
    For extra return you can sell out of the money covered calls on your holdings but that is a bit too long to explain here.

    • @veronicagray7171
      @veronicagray7171 3 роки тому

      Id like to hear that long explanation on the latter part~ : )

  • @matthewsherwin8741
    @matthewsherwin8741 3 роки тому

    Richard you did your usual excellent job with this video! This topic is always relevant. I usually take advantage of DRIP but sometimes I take cash dividends just so I have at least some cash income to help pay the bills. Thanks again! 👍👍👍

  • @investingwithaaron9876
    @investingwithaaron9876 4 роки тому +9

    Dividend investing is considered to be a defensive strategy while growth stocks are considered to be offensive. Just like a shield and a sword it needs a balance between the 2. Unless you become Captain America and the mastery of shield investing.

    • @gatorbuilt
      @gatorbuilt 3 роки тому +2

      there are only two ways to make money with stocks: dividends and buy-low-sell-high...not rocket surgery...the rest is just sales pushing.

    • @KittyTittyAnonymity
      @KittyTittyAnonymity 3 роки тому

      @@gatorbuilt there's
      Also intraday . Buy my course

    • @danlightened
      @danlightened 2 роки тому

      Man, I'd love to know more about rocket surgery.

  • @Kevin_Street
    @Kevin_Street 5 років тому +4

    Thank you for this video! It's very relevant to my interests and really well made!

    • @ThePlainBagel
      @ThePlainBagel  5 років тому

      Kevin Street thanks! Glad it was useful

  • @PumatSol
    @PumatSol 4 роки тому +4

    Dividends don’t actually get you more money. Reinvesting dividends doesn’t get you any more money than if the company just didn’t pay dividends to begin with. But you still have to pay taxes on those dividends you aren’t using

    • @spreeboc
      @spreeboc 4 роки тому +1

      TheAndrew0085 Some companies see a better return on cash payed directly to share holders than if they invested that in their business. Think about large corporations that have large market share in their industry. The marginal benefit of investing that cash directly into their company’s growth may not earn them an equivalent increase in revenue since they already own a large portion of the market so they pay it out to investors as an incentive to either reinvest it or hold their stock waiting for the next dividend payout. Investors have an incentive to hold the stock and that contributes to the company’s market value.

  • @Guilhermetal666
    @Guilhermetal666 4 роки тому +3

    Great video! Came here from Canal do Holder

  • @edgarrubalcaba
    @edgarrubalcaba 4 роки тому

    Nice video very nice man! I’m impressed of so much input and not only the fact that the video is very well made but also the info in it is top notch!

  • @kdown19flame43
    @kdown19flame43 4 роки тому

    ty

  • @joshuamclean4588
    @joshuamclean4588 5 років тому +1

    Companies prices falling is where short selling comes into play. And if its a short term drop, not a company failing cuz its a bad company but a temporary drop in prices, then buy more while its cheap. There is always a chance you could be wrong but if you are sure it could be very profitable.

  • @ZelenoJabko
    @ZelenoJabko 4 роки тому +6

    Why? Dividends are taxed at crazy rate!
    Just pick a non-dividend stock that does share buyback.

  • @mathias7398
    @mathias7398 3 роки тому +1

    this video was the video that made me want to start investing. thank you

  • @patelvidhu4840
    @patelvidhu4840 5 років тому

    Great video on dividends. I prefer dividend reinvest. It increases my return.

  • @VCR47527
    @VCR47527 4 роки тому +3

    Thanks for a great video!
    Could someone help me with a few questions?
    The videos about dividends I found seem to suggest people always pick a few dividend stocks they like to buy. Why don't I see people talking about high dividend ETF or indexes as much?
    Ben Felix's video about why dividends are irrelevant stated that for each dollar paid out in dividend, the value of the stock must drop the same amount. I don't understand why he said that. Any ideas?

    • @danlightened
      @danlightened 2 роки тому

      Cause it's true. A company's worth is decided by the profits they are generating, amongst other things. The company can use that money to bid for more projects, buy machinery, acquire other companies etc. This capex helps them to generate even more revenue which is factored-in in the share price as future growth prospects.
      But when they are giving out the money to you, they are unable to do any of the above.
      In technical terms,
      Share price=Market Cap/No of shares
      Profit/no of shares=Earnings per share (EPS)
      EPS x the no. of shares you own should be the return you make (theoretically, if the company liquidated night now).
      Let's say you earned $5 per share but were paid $1 in dividend, the EPS now is 4.
      Now, if the share price was $50, it will now be $49.
      And since, market cap (valuation) is usually calculated as share price/earnings per share [P/e], the market would dropped its share price, if they themselves didn't.

  • @OceanAce
    @OceanAce 5 років тому +1

    Plain Bagel is no good for keto dieters but apparently it can give resounding financial education.

  • @talori5417
    @talori5417 4 роки тому

    Thank you! Great info for a newbie like me!

  • @DailyDividends
    @DailyDividends 2 роки тому

    Yes we do

  • @uccoskun
    @uccoskun 5 років тому

    very good content. The only missing information I wish you had added is how to read total return year over year. For example what is the difference between close price and adjusted close price on yahoo finance? ;)

  • @unholy1771
    @unholy1771 5 років тому +9

    I was surprised when I looked at the number of views and subscribers. The quality of this video is of a much bigger channel.
    Keep it up.

  • @JazzJackrabbit
    @JazzJackrabbit Рік тому +1

    Tax laws may also disfavour dividend investments. In NZ, for example, dividends are taxed, but capital gains are not, so it makes sense to focus on capital gains instead.

  • @lily8261
    @lily8261 Рік тому

    Explained so well!

  • @ChocolateMilkCultLeader
    @ChocolateMilkCultLeader 4 роки тому

    Thanks Richard

  • @xdman20005
    @xdman20005 5 років тому +1

    thank you Bagel, very cool

  • @quietthomas
    @quietthomas 5 років тому +3

    1:11 What does "chasing the high steels" mean? Does that mean buying primary industries?

    • @ThePlainBagel
      @ThePlainBagel  5 років тому +3

      quietthomas the “highest yields” :P

  • @chiangweytan5937
    @chiangweytan5937 2 роки тому +1

    What is capital appreciation unless it's realised? And it's only realised in the secondary market, liquidation or a buyout. If dividends are not the main basis for the majority of investments, wouldn't the whole market be hinged on speculation?

  • @RideTheTrack
    @RideTheTrack 5 років тому +4

    how is it this channel only has 11K subs????

  • @danchevreux688
    @danchevreux688 5 років тому

    Excellent video!! Thank you

  • @jhlee9071
    @jhlee9071 5 років тому +8

    Hey I love your videos man! They're extremely well made.
    Quick question: What's the difference between the dividend snowball effect and a company reinvesting its earnings instead of giving out dividends? Aren't they the same?

    • @ThePlainBagel
      @ThePlainBagel  5 років тому +4

      Thanks for the kind comment! Theoretically they are approximately equal in impact, though tax implications for investors can influence the total return they get from each. I’ll try to expand further in my next Q&A :)

    • @joelman1989
      @joelman1989 4 роки тому +3

      Your logic is stronger than most people on this thread my friend. Be proud of yourself. They are basically the same thing.

    • @pedrolmlkzk
      @pedrolmlkzk 3 роки тому

      Investors choice is the difference

    • @dagothur76839
      @dagothur76839 2 роки тому

      @@joelman1989 i mean if thats true the arent dividends a percentage of a stock you sell

  • @PumatSol
    @PumatSol 4 роки тому +1

    Would have been prudent to mention that issuing dividends directly lowers returns, and expected total returns for dividend-issuing companies are the same as non-dividend issuing companies. No free lunch in economics.

  • @Piggy991
    @Piggy991 4 роки тому +1

    Compound interest and dividend reinvestment are the only two things you will ever need to be wealthy.

  • @SunnyGoklani9
    @SunnyGoklani9 5 років тому +1

    Great summary. How does one get a DRIP started?

  • @dactylntrochee
    @dactylntrochee 5 років тому +2

    I SO love DRIPping leveraged tax-free municipal bond funds. (Okay, the payout isn't really a dividend, but it behaves the same.) If my city of New York ever stops paying its obligations, it's all gonna be over anyway. But I also get other US funds; they're not tax-free for NY, but the big hit is federal, so I pay up -- it's small. Actually, the broader funds pay a little higher, but they're not the Big Apple. Maybe the regular old AAPL will run into trouble, but I think NYC is here to stay, at least for MY lifetime.
    I've had other strategies over the years, but this one balances my loves of eating well and sleeping well. Alas, you can't strike it rich, and have to work your day job for the duration of your productive years. For that, I can only recommend doing something reasonably lucrative that you enjoy.

  • @ojjunior4579
    @ojjunior4579 5 років тому +1

    Great video and explaination.

  • @jacobhefele1284
    @jacobhefele1284 Рік тому

    You are the man. Thanks for not watering things down.

  • @browndamon
    @browndamon 4 місяці тому

    Lovely breakdown 🥯

  • @tomascscm
    @tomascscm 5 років тому +2

    Shouldn't the fact that the company is paying dividends ultimately decrease the share price? Since that money has to necessarily come from the firm's cash reserves, meaning lower Assets and EV...

    • @ThePlainBagel
      @ThePlainBagel  5 років тому +3

      Yes sir! Usually we see the stock's price fall the day the dividend is paid out, though I used a flat price for simplicity

    • @davidbrooks8809
      @davidbrooks8809 11 місяців тому

      So basically dividends is not extra money

  • @jeanp.5929
    @jeanp.5929 3 роки тому +1

    Dividend investments might be my only reason to get into individual stocks but not until I've learned to research companies properly as I am a new investor. I bought myself some shares of an S&P 500 index fund and it pays me dividends but they automatically get reinvested. The money from the dividends was decent. I think it's like 1%. I invested a little over $10k and I got around $100 from dividends. But obviously, I can't use that money because it went right back to buying more shares. LOL

  • @Discovery_and_Change
    @Discovery_and_Change 2 роки тому +3

    6:53 Forced to cut dividend and stock price drops
    7:20 Chasing high yields can be a dangerous play
    When I first started investing in August 2020, I bought high dividend yield stocks. It worked well for 9 months and I collected good cash, but then companies started cutting or eliminating their dividends and stock prices fell and it took about 4 months of moving things around and re-investing to recoup my losses.
    I later learned that if I had just invested in stuff like Microsoft or Google from the beginning (which pays less than 1% and 0%), my portfolio could've been up a lot more.
    And just now when I started getting into the "solid" companies like Microsoft and Google, the market decides they're overvalued and hits us with -10% correction.

  • @Rick.Fleischer
    @Rick.Fleischer Рік тому +1

    Without dividends, the only way to extract value from a company, no matter how successful, is by losing (selling) parts (or using it as collateral for loans). Something about an increasing share price of a company that never pays dividends feels absurd.

    • @zachb1706
      @zachb1706 Рік тому

      Stock buybacks exist which can preserve your ownership of a company while providing you with an income

  • @jordancave6987
    @jordancave6987 5 років тому +2

    You sir just got yourself a subscriber

  • @emerstarfundamentalinvesti4591
    @emerstarfundamentalinvesti4591 5 років тому +3

    If the company can reinvest its money back in the business and make better return, they should do it.
    Less taxes paid and more gains.

  • @Amir-jn5mo
    @Amir-jn5mo 2 роки тому

    I really want to know people's opinion on dividend stocks for people who are approaching retirement. Is it possible and also sensible to live off of dividends after you retired with a sizable asset you have cumulated over the years?

  • @TricoliciSerghei
    @TricoliciSerghei 3 роки тому

    Love the videos man, keep them up, it's even better than a book!

  • @josua_htp
    @josua_htp 5 років тому

    See you on top Richard the Plain Bagel!

  • @19Forex87
    @19Forex87 3 роки тому +3

    What you didn't explain is that when a company pays dividend the stock price decrease by the same amount of the dividend paid so what you said is not 100% accurate. If you have a share worth 20$ that pays 1$ dividend at the end of the year you would have a share worth $19 and a dividend of $1 dollar.

  • @shinyprisma6085
    @shinyprisma6085 2 роки тому

    I don't even really think about stuff like this but watching videos about it is interesting

  • @dogfamily3115
    @dogfamily3115 4 роки тому +5

    Do you recommend any platform to use that offer drip program? I use Robinhood bc is free but it doesn’t have drip

  • @DarkAngel-vs3om
    @DarkAngel-vs3om 5 років тому

    Great video easy to understand keep up the good work :) def recommended for beginners

  • @Lucas98445
    @Lucas98445 4 роки тому

    Awesome video! Great recommendation on Fabio Holder's channel

  • @dc-nm9jo
    @dc-nm9jo 4 роки тому

    I am lucky to have chosen low(ish) yield but solid companies so far. very informative video, thanks bro

  • @Magic_beans_
    @Magic_beans_ 6 місяців тому

    2023 example of a “dividend trap”: Hawaiian Electric. As of this writing (30 Nov 2023) their profile on various investment sites shows a dividend yield of 12-14%.
    _However_ , they’re partly responsible for the Maui fires earlier this year, so they face an unknown but probably large liability for damages. This means (1) their share price got smacked down, and (2) they suspended their dividend to free up cash for when that liability comes due. Someone who doesn’t know the context could buy in thinking they’ve found a great income stream, only to learn it’s not coming anytime soon.

  • @astrolabsaudio8235
    @astrolabsaudio8235 2 роки тому

    are dividends from stocks taxed at your ordinary rate? even if theyre reinvested to purchase additional shares?

  • @robertonditi7715
    @robertonditi7715 4 роки тому

    💪Richard please do one for Real Estate and Finance