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re: Dividend play for long term (30+ yrs) vs Index
Posted on 1/21/14 at 9:50 am to DucksnBucks37
Posted on 1/21/14 at 9:50 am to DucksnBucks37
What has been said by previous posters is pretty spot on.
Thought I would share a bit on the importance of dividends to total return.
If you look at the Ibbotson year book tables for Large Company stocks $1,000 invested in the index (no div reinvestment) in 1925 grew to $98,560 by 2011.
$1,000 invested in the index with dividends reinvested grew to $2,982,240 over the same period.
Also, purchasing direct divided paying stocks with a long history of raising dividends and strong company models can be used to effectively annuitize starting principle at the average dividend rate. This can potentially also lead to strong capital appreciation over a long time period (although you will be subject to market volatility, esp in the short term).
Thought I would share a bit on the importance of dividends to total return.
If you look at the Ibbotson year book tables for Large Company stocks $1,000 invested in the index (no div reinvestment) in 1925 grew to $98,560 by 2011.
$1,000 invested in the index with dividends reinvested grew to $2,982,240 over the same period.
Also, purchasing direct divided paying stocks with a long history of raising dividends and strong company models can be used to effectively annuitize starting principle at the average dividend rate. This can potentially also lead to strong capital appreciation over a long time period (although you will be subject to market volatility, esp in the short term).
1
Posted on 1/21/14 at 9:58 am to Maderan
If you want simplicity, diversification, and low fees (key imo), go with Vanguard's funds.
I personally prefer targeting div yielding stocks and creating an entry position when the stock looks depressed. Buy more over time whether it goes up or down unless the company is in terrible financial shape.
Reinvest those dividends as well... do that over a 20 year period plus, and the mathematics really begins working in your favor.
I personally prefer targeting div yielding stocks and creating an entry position when the stock looks depressed. Buy more over time whether it goes up or down unless the company is in terrible financial shape.
Reinvest those dividends as well... do that over a 20 year period plus, and the mathematics really begins working in your favor.
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