VTI - Understanding The Dividend Investing Model And A Gold Standard Dividend ETF
2024-07-17 13:03:55 ET
Summary
- Today, we explore dividend investing, discussing why they matter to shareholders and the impact on total returns.
- Dividend growth is driven primarily by earnings growth, but there are other contributing factors, such as share buybacks.
- We explore the outlook of buybacks for certain dividend-paying companies as repurchases accelerate.
Dividend investing remains one of the most fundamentally successful investing models. The value proposition follows the idea of "a bird in the hand is worth two in the bush", meaning pay me now rather than promise expansion.
Dividend-paying companies are generally mature businesses with a more limited set of growth prospects. Dividend critics will often bring up opportunity cost, citing that dividends are capital that the company could have invested to grow. This operates under the assumption that the capital would be productively reinvested. This is simply not the case with various examples including Altria Group, Inc.'s ( MO ) investment in JUUL and Apple Inc.'s ( AAPL ) self-driving money pit ....
Understanding The Dividend Investing Model And A Gold Standard Dividend ETF