Passive income from dividends. Is it a mistake?

[sprite09]

Just stop saying stupid shit that you heard on Youtube. Actually provide references for your statements. You'll find out how often you're wrong Per below, The S&P500 (and many other indexes) rates of return are better with re-invested dividends.

If you're going to say, "Bruh, individual stocks" then you're just cherry picking data to suite your argument. I mean, GOOD LUCK even beating the index with your "pure equity" stocks since about 70% of professionals cannot beat the index. Given your posts, I'm pretty sure you can't either.

I'm also waiting for "oh but if they didn't pay dividends the S&P500 would be higher". No, that's called fantasy and lying because you don't know that. You're being hopeful and making shit up to suite your argument...

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Example RBC. Plain old boring dividend stock. With dividends, average total return of 15% since 1995. You're more than welcome to pick stocks that you like and, over the long run say since 1995, you'll see which basket of stocks do better.

Same with all the banks. Same with ENB. Same with FTS. Same with EMA. and so on.


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You really have no credibility.

Indeed, with reinvestment. I think many people in general think they're free money and thus do not reinvest.

 

[sprite09]

This is true that average (not marginal) Capital Gains are taxed more favorably. This happens around $130K-ish average. However, given that it's likely..what...80% of the Canadian population won't have invested enough to reach this point, I'd say it's a good recommendation to invest in dividends versus capital gains in general.

There is an exception though. I brute forced a spreadsheet that shows IF a person starts investing in mid-40s and later, investing for dividends is the way to go for income. HOWEVER, if they're starting investing below mid-40s, capital gains (and selling for income) is much much better due to the on-going taxation of dividends pre-retirement.

As for outperformance compared to indexes with your own basket of stocks, the SPIVA report is the one you're looking for. That is, most experts cannot beat the index and a large percentage (70%?) under-perform.

https://www.spglobal.com/spdji/en/spiva/article/spiva-canada/

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LOL, yeah, and of course average Joe on Terb thinks he can outperform. Like I said, not impossible, but unlikely, especially over the long-term.

Yeah, regarding taxes, it's a tricky one as it depends on so many factors (especially if you wanna avoid gov't clawbacks), and you threw in another one regarding dividends vs capital gains pre-retirement. I was going by the assumption for retired people who are super wealthy, which is apparently a lot of people here, LOL.

Another thing for investors focused on CANADIAN dividend-paying stocks (due to the DTC) to take note of is that it greatly limits your opportunity set (Canadian equities are already peanuts in terms of global equities to begin with) and thus excessive idiosyncratic risk (less diversification).

 

[ValuedSupporter]

Indeed, with reinvestment. I think many people in general think they're free money and thus do not reinvest.

Ya, I have no idea where this idea of "Free Money" comes from. Much like government spending on OAS...it's "Free Money" right? Well...given ~40% don't pay taxes, free for some