re: Buying stock long term

quote:

---

Also, I'm shooting for 3-4% yield, but I'm assuming thats irrelevant to your argument.

---

Correct, that is irrelevant for this particular point.

quote:

---

No. I don't understand it at all

---

Ok, I'm going to try to keep as simple as possible. It's not a real life example but it will work for this math problem.

First, lets assume the value of your portfolio is $100k in both scenarios.

Scenario A: The portfolio is equally weighted among your choice of 8 dividend paying stocks that average to 2.89% yield.

Scenario B: All in with VHDYX (Vanguard High Dividend Yield Index Fund) at 2.89% yield.


With scenario A, your dividend income would be 100k x 2.89%. = $2,890

With scenario B, your dividend income would be 100k x 2.89%. = $2,890

The point is that the quantity of dividend payments does not change the amount of income. The income is calculated from multiplying your balance times the yield (whether its made up of 8 stocks or 1 fund).

Like I said, that's keeping it very simple to just show you that 8-10 is not necessarily better than 1. I'll post a follow-up shortly explaining the other factors that drastically complicate things.