Category archives: Say No To Dividend Investing

Has Dividend Investing Worked, And Will It Work Going Forward?

Last update on June 4, 2015.

McDonald's

"You look a lot like Warren Buffett"

"Yeah, I get that a lot" - Warren Buffett

Many people have a hard time recognizing Warren Buffett in person. Buffett doesn't dress like how people expect a billionaire would, eats at McDonald's, and regularly shops at Walmart.

Buffett is not the only frugal rich person. Sam Walton, the founder of Walmart, drove an "old pick-up truck with cages in the back for my bird dogs". Carlos Slim, who was the richest man in the world not too long ago, lives in a modest 6 bedroom home he's lived in for ...

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Is Your Dividend Stock A Ponzi Scheme?

Last update on March 10, 2014.

Bernard Madoff

 

How To Create A Dividend Ponzi Scheme

Here's a get rich quick scheme that just might work.

Let's say that a corporation named XYZ raises $1 million from various investors and start a public company, by selling 100,000 shares at $10 each.

This company does absolutely nothing productive. It doesn't make anything, nor does it sell anything. It doesn't even put the money in a bank to earn interest. However, this company does return $100,000 a year to its investors in dividends. That means shareholders receive $1 in dividends each year for every ...

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Dividend Investing Won't Work

Last update on Dec. 20, 2014.

 Poker table

Poker table: Investing is a lot like poker. Drawing analogies from poker helps to explain why simple investment strategies such as dividend investing don't work.

 

Many people today like to invest in higher yielding dividend stocks. In this series, I explain the reasons why I'm not a fan of this approach.

In our last installment, I explained why dividend stocks aren't any safer than other stocks. In this article, I will explain why I think you shouldn't follow the dividend investing strategy, or any other simple investing strategy for that matter.

The Perceived Advantages ...

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Are Dividend Stocks Really Safe?

Last update on Sept. 2, 2013.

Roller skates on rollercoster

You sure about that, bud? Many people buy dividends stocks thinking they're safe. But is this really the case?

 

Many people today like to invest in higher yielding dividend stocks. In this series, I explain the reasons why I'm not a fan of this approach.

In our last installment, I explained why companies on a path to high growth should not pay dividends, as doing so actually hurts the investor. If you follow the dividend investing philosophy, you would unfairly leave out such companies from your portfolio, robbing yourself of potentially high returns.

In this installment, I ...

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When Paying Dividends Actually Hurts Investors

Last update on Aug. 21, 2013.

Profits ahead sign

Profits sign: Should highly profitable companies pay dividends?

 

Many people today like to invest in higher yielding dividend stocks. In this series, I explain the reasons why I'm not a fan of this approach.

In our last installment, I explained why the dividend investing has become popular in recent years, as well as why I think the popularity will fade. In this installment, I will explain why companies can actually hurt the investor by choosing to pay dividends.

The Dividend Discount Model

First, let me explain a rational way to value stocks, that at face value will make ...

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Is Dividend Investing Just A Fad?

Last update on Aug. 7, 2013.

Shenanigans?: Companies are taking advantage of the popularity with dividends to 'trick' investors into buying stock

 

In the last installment of the series, I explained what dividends are, and why dividends have no bearing on the short term price of stocks.

I think I'm going to offend some people today, because I'm going to explain why I think dividends are just a fad.

Why dividends are popular today

Dividends weren’t always this popular. Throughout history, there were periods in time when it was more popular than others. We live in one such period today.

Dividends recently became ...

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Dividends' Effect On Short Term Stock Prices

Last update on Jan. 16, 2015.

 

If you take a look at around the personal finance blogosphere (This link shows you a list of blogs), you'll see that almost everybody likes dividend stocks. Some of the bloggers who invest based on dividends include 'The Million Dollar Journey', 'Boomer And Echo', 'Young And Thrifty', and many many more. Some blogs even have the word 'Dividend' right in their names!

To be sure, I don't have anything against these bloggers for choosing to invest in dividend stocks. In fact, I like some of the blogs I mentioned. However, I don't think their investment strategy ...

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