#9 in Stock market investing books
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Reddit mentions of Shareholder Yield: A Better Approach to Dividend Investing
Sentiment score: 1
Reddit mentions: 1
We found 1 Reddit mentions of Shareholder Yield: A Better Approach to Dividend Investing. Here are the top ones.
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| Height | 11 Inches |
| Length | 8.5 Inches |
| Weight | 0.45 Pounds |
| Width | 0.14 Inches |
> They should be. Over time the drag it creates on your portfolio will be more apparent. The average investor is an idiot.
The drag on your portfolio returns as a result of decisions based solely on tax considerations will be greater than one where tax efficiency is just one of several criterion.
> Correct in principle but not completely true. The company itself can buy back shares in order to distribute profits back to shareholders in a more tax-efficient manner.
But then the timing on the buyback has to coincide with whether the shares are under, fair, or overvalued. If a company buys back its stock at an undervalued price, then yes, it is more tax efficient. If it does it at fair value, there is no net gain. And if buybacks are done when the stock is overvalued, shareholder wealth is destroyed. See: IBM, Pfizer. So not only do you have to wait for other shareholders to push the price up, but you have to trust that the company is buying back its shares at an advantegous price. That's a lot of conditionals, some of which will actually leave you worse off (buybacks at overvalued price) for the sake of a slightly lower tax rate.
> But dividend growth investing isn't a formula.
Point. But it is a simple strategy nonetheless.
> It's a rough set of guidelines. Picking stocks which will outperform an S&P 500 index seems like complete dumb luck aided by curve-fitting. All of these dividend growth bloggers never seem to include stocks which were great buys for the strategy 20 or 30 years ago but have since been delisted in a demonstration that the strategy can produce alpha.
There was recently a post either here or in /r/finance on an academic paper that showed over a 50 year period, dividend growers outperform high yielders, which in turn still out performed SP500. A growing dividend is typically a sign of strong financial health, for various reasons. Other works (i.e. here and here) show that dividend paying stocks do outperform the market.