John Bogle on Dividends

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Zeno
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Re: John Bogle on Dividends

Post by Zeno »

CyclingDuo wrote: Mon Oct 18, 2021 8:32 am Our household fits into the JPMorgan graph of household spending dropping as you age. it really dropped in 2020 and 2021 due to the pandemic, and it is interesting how easily one adjusts to spending less. Regardless, however one wants to divvy up the third leg (investments/savings) of the traditional three legged stool of retirement income - we all have dividends to deal with whether they come from an index fund, ETF or individual company stock investments. I don't even track dividends in traditional retirement accounts since they will all come out as ordinary income when the time comes. I do, however, track the taxable account and the Roth IRA accounts and know the annual/monthly/daily numbers for the dividends.

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

CyclingDuo
Thank you for posting that graphic and its reference. I wasn't aware of the reference. Very interesting.
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Re: John Bogle on Dividends

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HanSolo wrote: Fri Oct 15, 2021 10:36 am
dbr wrote: Fri Oct 15, 2021 10:16 am
HanSolo wrote: Fri Oct 15, 2021 9:50 am I don't personally have any objection to his statements as I consider my own personal case. If others have an issue, that's up to them. If you have an issue, feel free to quote the text and state your issue.
Sure, Mr. Bogle is quoted as saying (for everyone is implied) the following:

"And in the retirement stage, that’s what investing should be about—regular checks from dividends and/or from Social Security and/or from a pension account."

I don't agree because I contend that a retirement can perfectly possibly be funded by making withdrawals from one's assets that have nothing to do with what dividends are or aren't paid out by those assets.
If you mean you disagree that you should invest that way, sounds fine to me. It's up to you.

As for my situation, I might do something like the above. I'm not far off of that now.

As for others, I don't have any issue if they do the above or not.
That's right. Mr. Bogle is making a most definite statement regarding how one should manage the process of obtaining income from a portfolio in retirement, and his recommendation for how to do that is just not the only, nor necessarily the best, nor even a practical way to manage that process. For a retiree who wants to understand how to best manage that process for himself that statement by Mr. Bogle constitutes misdirection even though for some individuals what he describes might be exactly what that individual chooses to do. I don't think misdirection in investment advice is helpful.

The OP asked this question: "With this kind of sound reasoning, I wonder why there is so much opposition to dividend investing on this forum?"

So the answer to the OP's question would be that it is not entirely sound reasoning, at least it is not complete and and it is not necessarily helpful. The OP is wrong that there is a lot of opposition to dividend investing on the forum. What is posted is a lot of comment that dividend investing is not a complete consideration of everything in the process and should not be relied on all by itself for a full analysis of what one might do to manage investments or to manage the process of withdrawal from assets in retirement. In some cases it is one of possible approaches a person might well adopt and in other cases it might not be the best idea, being founded on some misconception or another.
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CyclingDuo
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Re: John Bogle on Dividends

Post by CyclingDuo »

WyomingFIRE wrote: Mon Oct 18, 2021 8:52 am
CyclingDuo wrote: Mon Oct 18, 2021 8:32 am Our household fits into the JPMorgan graph of household spending dropping as you age. it really dropped in 2020 and 2021 due to the pandemic, and it is interesting how easily one adjusts to spending less. Regardless, however one wants to divvy up the third leg (investments/savings) of the traditional three legged stool of retirement income - we all have dividends to deal with whether they come from an index fund, ETF or individual company stock investments. I don't even track dividends in traditional retirement accounts since they will all come out as ordinary income when the time comes. I do, however, track the taxable account and the Roth IRA accounts and know the annual/monthly/daily numbers for the dividends.

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

CyclingDuo
Thank you for posting that graphic and its reference. I wasn't aware of the reference. Very interesting.
Yes, the guide is an awesome reference to use for households with their financial planning. At age 60, I am still allowing myself to be somewhat in denial - or maybe disinterest is a better word - when reading the sections between pages 28 and 35 regarding health care, LTC, etc..., but I am slowly starting to warm up to it all for planning purposes.

CyclingDuo
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Zeno
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Re: John Bogle on Dividends

Post by Zeno »

CyclingDuo wrote: Mon Oct 18, 2021 10:03 am Yes, the guide is an awesome reference to use for households with their financial planning. At age 60, I am still allowing myself to be somewhat in denial - or maybe disinterest is a better word - when reading the sections between pages 28 and 35 regarding health care, LTC, etc..., but I am slowly starting to warm up to it all for planning purposes.

CyclingDuo
I hear you on that. And if anything, those HC/LTC numbers seem low to me.

I'm 57; DW is 61.

For HC, our monthly premium would be circa $2100 (until age 65, and each of us arrives there at a different age) if employment ended. The ACA doesn't work for us for complicated reasons. Anyway, our current annual pre-65 HC premium number is ~25K.

Meanwhile, we are currently paying $707 per month for two LTC policies, a number which seems to escalate "nicely" every year. Annualized, that is ~$8.5K of course.

Anyway, at age 57, our pre-65 annual HC premium + LTC "floor" budgetary number is $33.5K, a value which I anticipate to continue to rise, year after year.

I feel like I'm scratching in the dirt to make it to age 65 at which point some financial relief in the form of MC should be at hand.
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Re: John Bogle on Dividends

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dbr wrote: Mon Oct 18, 2021 9:43 am The OP is wrong that there is a lot of opposition to dividend investing on the forum. What is posted is a lot of comment that dividend investing is not a complete consideration of everything in the process and should not be relied on all by itself for a full analysis of what one might do to manage investments or to manage the process of withdrawal from assets in retirement. In some cases it is one of possible approaches a person might well adopt and in other cases it might not be the best idea, being founded on some misconception or another.
If you mean that some dividend investors don't know what they're doing, then of course I agree. Likewise, some growth investors don't know what they're doing.

In my opinion, the trigger for launching into opposition/scrutiny shouldn't be that someone merely mentioned dividend investing, it should be that they've shown evidence of a misconception about it.

I've observed the former happening, and I think that makes the OP's question a legitimate one.
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Re: John Bogle on Dividends

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HanSolo wrote: Mon Oct 18, 2021 10:48 am
dbr wrote: Mon Oct 18, 2021 9:43 am The OP is wrong that there is a lot of opposition to dividend investing on the forum. What is posted is a lot of comment that dividend investing is not a complete consideration of everything in the process and should not be relied on all by itself for a full analysis of what one might do to manage investments or to manage the process of withdrawal from assets in retirement. In some cases it is one of possible approaches a person might well adopt and in other cases it might not be the best idea, being founded on some misconception or another.
If you mean that some dividend investors don't know what they're doing, then of course I agree. Likewise, some growth investors don't know what they're doing.

In my opinion, the trigger for launching into opposition/scrutiny shouldn't be that someone merely mentioned dividend investing, it should be that they've shown evidence of a misconception about it.

I've observed the former happening, and I think that makes the OP's question a legitimate one.
Certainly one of the misconceptions sometimes posted here is the idea that to withdraw money from a portfolio you have to arrange to have money paid to you in the form of dividends. Mr. Bogle is saying in no uncertain terms that this is so. Any variety of posters have responded to that by pointing out that it is perfectly practical and reasonable to just withdraw whatever one deems prudent by any combination of taking dividends or selling shares. In fact if the withdrawal is from a 401k or IRA it might not even be possible to identify what dividends have been paid, but the retiree can always sell something and then withdraw the cash produced as a distribution from the account. Mr. Bogle is also implying that if one makes withdrawals by taking dividends that one then needs have no concern regarding the return obtained by the portfolio. That is not true. A variation on that theme is that one can "rely" on dividends but one cannot rely on the price of shares. While there is literal truth there, it is irrelevant to what the problem to be solved actually is. The misconception gets even deeper if the investor claims that the method should be to cash distributions but never "invade" principal by selling shares.

I do note that Mr. Bogle does qualify his statement by starting with "Oversimplifying, . . . " And, I think that is correct. It is oversimplifying to the point of becoming bad advice. But the question of how most effectively to decide how much to spend from a portfolio in retirement can't be made more simple than it actually is. I would argue if there is a simpler way to analyze the problem and decide on courses of action, it is simpler to start with total return accounting rather than to start with dividends. In the end a person might well rationally decide to set his withdrawals at what the dividends paid are, but he would be doing that in an informed way.
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Re: John Bogle on Dividends

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dbr wrote: Mon Oct 18, 2021 11:11 am
HanSolo wrote: Mon Oct 18, 2021 10:48 am
dbr wrote: Mon Oct 18, 2021 9:43 am The OP is wrong that there is a lot of opposition to dividend investing on the forum. What is posted is a lot of comment that dividend investing is not a complete consideration of everything in the process and should not be relied on all by itself for a full analysis of what one might do to manage investments or to manage the process of withdrawal from assets in retirement. In some cases it is one of possible approaches a person might well adopt and in other cases it might not be the best idea, being founded on some misconception or another.
If you mean that some dividend investors don't know what they're doing, then of course I agree. Likewise, some growth investors don't know what they're doing.

In my opinion, the trigger for launching into opposition/scrutiny shouldn't be that someone merely mentioned dividend investing, it should be that they've shown evidence of a misconception about it.

I've observed the former happening, and I think that makes the OP's question a legitimate one.
Certainly one of the misconceptions sometimes posted here is the idea that to withdraw money from a portfolio you have to arrange to have money paid to you in the form of dividends.
I have never seen that assertion posted on the forum. Can you cite an example? "Have to" sounds like "must", as in, "the only way possible". While there may be people who avail themselves of the choice to do so, I've never seen anyone claim that this is what anyone "must" do.

Even if one or two people did post something like that, it doesn't explain, as you put it, "a lot of comment" criticizing dividend investing. In most (or possibly all) of the cases where this "lot of comment" is issued, nobody committed the offense you're suggesting.
Mr. Bogle is saying in no uncertain terms that this is so.
Can you cite an example? I've seen where he presented options. That's different from what you're claiming he did.
Mr. Bogle is also implying that if one makes withdrawals by taking dividends that one then needs have no concern regarding the return obtained by the portfolio. That is not true.
Again, "needs have no concern" sounds like it eliminates other options, that there is "one right answer". Can you cite where he did that?
I do note that Mr. Bogle does qualify his statement by starting with "Oversimplifying, . . . " And, I think that is correct. It is oversimplifying to the point of becoming bad advice.
No, it's not bad advice. First, it's clear enough that he's presenting an option. Second, some people who have read his books might decide that they prefer that particular option. They aren't doing anything wrong.

In some aspects, I'm implement the options in question. Regardless of your opinion, I know that I'm not doing anything wrong.
Last edited by HanSolo on Mon Oct 18, 2021 12:49 pm, edited 1 time in total.
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Re: John Bogle on Dividends

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HanSolo wrote: Mon Oct 18, 2021 12:47 pm
dbr wrote: Mon Oct 18, 2021 11:11 am
HanSolo wrote: Mon Oct 18, 2021 10:48 am
dbr wrote: Mon Oct 18, 2021 9:43 am The OP is wrong that there is a lot of opposition to dividend investing on the forum. What is posted is a lot of comment that dividend investing is not a complete consideration of everything in the process and should not be relied on all by itself for a full analysis of what one might do to manage investments or to manage the process of withdrawal from assets in retirement. In some cases it is one of possible approaches a person might well adopt and in other cases it might not be the best idea, being founded on some misconception or another.
If you mean that some dividend investors don't know what they're doing, then of course I agree. Likewise, some growth investors don't know what they're doing.

In my opinion, the trigger for launching into opposition/scrutiny shouldn't be that someone merely mentioned dividend investing, it should be that they've shown evidence of a misconception about it.

I've observed the former happening, and I think that makes the OP's question a legitimate one.
Certainly one of the misconceptions sometimes posted here is the idea that to withdraw money from a portfolio you have to arrange to have money paid to you in the form of dividends.
I have never seen that assertion posted on the forum. Can you cite an example? "Have to" sounds like "must", as in, "the only way possible". While there may be people who avail themselves of the choice to do so, I've never seen anyone claim that this is what anyone "must" do.

Even if one or two people did post something like that, it doesn't explain, as you put it, "a lot of comment" criticizing dividend investing. In most (or possibly all) of the cases where this "lot of comment" is issued, nobody committed the offense you're suggesting.
Mr. Bogle is saying in no uncertain terms that this is so.
Can you cite an example? I've seen where he presented options. That's different from what you're claiming he did.
Mr. Bogle is also implying that if one makes withdrawals by taking dividends that one then needs have no concern regarding the return obtained by the portfolio. That is not true.
Again, "needs have no concern" sounds like it eliminates other options, that there is "one right answer". Can you cite where he did that?
I do note that Mr. Bogle does qualify his statement by starting with "Oversimplifying, . . . " And, I think that is correct. It is oversimplifying to the point of becoming bad advice.
No, it's not bad advice. First, it's clear enough that he's presenting an option. Second, some people who have read his books might decide that they prefer that particular option. They aren't doing anything wrong.

To some degree, I implement the option in question via certain tilts in my IRA. Regardless of your opinion, I know that I'm not doing anything wrong.
I've posted my opinions and analysis. I'm not going to argue with you. If you see things differently there is nothing wrong with that.
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Re: John Bogle on Dividends

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dbr wrote: Mon Oct 18, 2021 12:49 pm I've posted my opinions and analysis. I'm not going to argue with you. If you see things differently there is nothing wrong with that.
Nobody is arguing. I just wanted to know whether or not there's any evidence to the claim that some forum members have the alleged misconceptions about dividend investing. Since we haven't uncovered any, the OP's question remains valid:
GoneOnTilt wrote: Wed Oct 13, 2021 10:44 am With this kind of sound reasoning, I wonder why there is so much opposition to dividend investing on this forum?
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Re: John Bogle on Dividends

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HanSolo wrote: Mon Oct 18, 2021 12:53 pm
dbr wrote: Mon Oct 18, 2021 12:49 pm I've posted my opinions and analysis. I'm not going to argue with you. If you see things differently there is nothing wrong with that.
Nobody is arguing. I just wanted to know whether or not there's any evidence to the claim that some forum members have the alleged misconceptions about dividend investing. Since we haven't uncovered any, the OP's question remains valid:
GoneOnTilt wrote: Wed Oct 13, 2021 10:44 am With this kind of sound reasoning, I wonder why there is so much opposition to dividend investing on this forum?
I'm not going to run out and find examples for you. If you think there aren't any then so be it.
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Re: John Bogle on Dividends

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dbr wrote: Mon Oct 18, 2021 12:55 pm I'm not going to run out and find examples for you. If you think there aren't any then so be it.
When the discourse is repeatedly issued, "there are people out there who have this problem", and whenever someone asks, "who", the response is, "well, they're out there", then that is why we wind up with a thread that asks why people keep hammering on a certain thing.

Bottom line, the OP's question remains open.
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Re: John Bogle on Dividends

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The bottom line is there is a valid controversy, where Bogle lauded something that helped perpetuate stone age thinking. The reality is that issuers pay dividends simply because that’s something shareholders have been brainwashed to want, not because it’s actually beneficial for them.

Simply put, a dividend is nothing more than a forced sale of part of your asset, at a time and amount chosen by the issuer. With growth stocks that pay no dividends, the owner can choose the timing and amount of when they want to realize profits and pay taxes, if applicable. How is not having control of timing and amount better than having control ? Answer, it’s not. Of course if one does not pay taxes this is less of an issue, but look at any asset location explanation and it is suggested to put stocks in taxable, at least those that pay qualified div (vs reit for instance). At best there is no advantage to dividends, at worst there is a disadvantage (vs pure price growth).

So for those who can’t find a thread, here is one now, challenging the value of dividends.
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Re: John Bogle on Dividends

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beyou wrote: Mon Oct 18, 2021 4:42 pm The bottom line is there is a valid controversy, where Bogle lauded something that helped perpetuate stone age thinking. The reality is that issuers pay dividends simply because that’s something shareholders have been brainwashed to want, not because it’s actually beneficial for them.
I'm one of the people you're referring to. I have a fixed number of VBIAX shares in taxable, no plans to buy or sell shares ever again, and I don't reinvest dividends, just collect them as income. I'm in a low tax bracket, so the tax implications on me are not significant. In tax-deferred, I have a healthy dose of Wellesley, which invests in dividend stocks. I understand exactly what these funds do, and they are doing what I want.

My question is, if my investments are doing exactly what I want them to do, and someone says "there's a problem", then... who has a problem?

Why do I need to be told that I have been brainwashed?

And if lack of control over distributions is such a great evil in the world... then why aren't the anti-dividend hound dogs dedicating as much time and effort to lobbying against all bonds other than zero-coupon bonds? Are they similarly "brainwashed" in the case of bonds?
Simply put, a dividend is nothing more than a forced sale of part of your asset, at a time and amount chosen by the issuer. With growth stocks that pay no dividends, the owner can choose the timing and amount of when they want to realize profits and pay taxes, if applicable. How is not having control of timing and amount better than having control ?
Since you asked, I will answer.

First, according to the saying "caveat emptor" (let the buyer beware), I was already aware of the pattern of distributions of the funds in question before I bought them. I knew what I wanted, and I bought the funds that did that. They are still doing it. Thus, for me, the problem that you referred to does not exist. I do not have that problem.

Second, some investors buy and hold for longer than the lifespan of some companies. Some of those companies eventually have their stock go to zero, having returned nothing to their common shareholders in the aggregate (i.e., 100% total net loss). At the other extreme, some companies have already returned, via dividends, over 100% of invested equity. I like the latter situation better than the former. And if someone wants to worry that I'm "brainwashed", that's OK with me. Let them worry (quietly is preferred).

Third, if I can put cash to better use than some company whose shares I own, the cash would be better off if handed over to me. Warren Buffett expressed a similar sentiment (as quoted in another thread). Some will disagree with my opinion, and that is their right. I can act on my opinion, and that is my right.

Conclusion: while every category of investors has some people with misconceptions (dividend investors, growth investors, stock investors generally, bond investors, etc.), automatically assuming that all dividend investors are "brainwashed" is going overboard by quite a bit.
GoneOnTilt wrote: Wed Oct 13, 2021 10:44 am With this kind of sound reasoning, I wonder why there is so much opposition to dividend investing on this forum?
Bottom line for me... I wish the anti-dividend hound dogs would stop hounding people who haven't done anything wrong.
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Re: John Bogle on Dividends

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"The Plight of the Dividend Lover" - a Haiku by burittoLover

Magic dividends
Leave me alone you haters
I will get my cash
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Re: John Bogle on Dividends

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HanSolo wrote: Tue Oct 19, 2021 12:27 am Bottom line for me... I wish the anti-dividend hound dogs would stop hounding people who haven't done anything wrong.
If I understand your standard, there should be little discussion of investing in bogleheads. Your argument comes across to me as "All that is relevant is what is good for me, which includes personal factors or feelings, and that make arguing against my choices 'hounding'". A similar statement could be made about lots of investing topics, e.g.

I wish the anti-international hound dogs would...
I wish the anti-crypto hound dogs...
I wish the anti-gold hound dogs...
I wish the anti-bond hound dogs...
I wish the anti-REIT hound dogs...

I think presenting reasons (ideally for my personal preferences with supporting data) for and against investing in any particular way is a legitimate topic in bogleheads. Perhaps one may say it is among the main points of the bogleheads forums. For me, continuously attempting to discourage those who disagree with your POV from posting isn't a reasonable stance as long as they are following forum guidelines. YMMV. I'd encourage those who believe in a dividend focused strategy to keep posting and those who are total return investing advocates to likewise keep posting.
Last edited by Da5id on Tue Oct 19, 2021 6:52 am, edited 2 times in total.
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Re: John Bogle on Dividends

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HanSolo wrote: Tue Oct 19, 2021 12:27 am
beyou wrote: Mon Oct 18, 2021 4:42 pm The bottom line is there is a valid controversy, where Bogle lauded something that helped perpetuate stone age thinking. The reality is that issuers pay dividends simply because that’s something shareholders have been brainwashed to want, not because it’s actually beneficial for them.
I'm one of the people you're referring to. I have a fixed number of VBIAX shares in taxable, no plans to buy or sell shares ever again, and I don't reinvest dividends, just collect them as income. I'm in a low tax bracket, so the tax implications on me are not significant. In tax-deferred, I have a healthy dose of Wellesley, which invests in dividend stocks. I understand exactly what these funds do, and they are doing what I want.

My question is, if my investments are doing exactly what I want them to do, and someone says "there's a problem", then... who has a problem?

Why do I need to be told that I have been brainwashed?

And if lack of control over distributions is such a great evil in the world... then why aren't the anti-dividend hound dogs dedicating as much time and effort to lobbying against all bonds other than zero-coupon bonds? Are they similarly "brainwashed" in the case of bonds?
Simply put, a dividend is nothing more than a forced sale of part of your asset, at a time and amount chosen by the issuer. With growth stocks that pay no dividends, the owner can choose the timing and amount of when they want to realize profits and pay taxes, if applicable. How is not having control of timing and amount better than having control ?
Since you asked, I will answer.

First, according to the saying "caveat emptor" (let the buyer beware), I was already aware of the pattern of distributions of the funds in question before I bought them. I knew what I wanted, and I bought the funds that did that. They are still doing it. Thus, for me, the problem that you referred to does not exist. I do not have that problem.

Second, some investors buy and hold for longer than the lifespan of some companies. Some of those companies eventually have their stock go to zero, having returned nothing to their common shareholders in the aggregate (i.e., 100% total net loss). At the other extreme, some companies have already returned, via dividends, over 100% of invested equity. I like the latter situation better than the former. And if someone wants to worry that I'm "brainwashed", that's OK with me. Let them worry (quietly is preferred).

Third, if I can put cash to better use than some company whose shares I own, the cash would be better off if handed over to me. Warren Buffett expressed a similar sentiment (as quoted in another thread). Some will disagree with my opinion, and that is their right. I can act on my opinion, and that is my right.

Conclusion: while every category of investors has some people with misconceptions (dividend investors, growth investors, stock investors generally, bond investors, etc.), automatically assuming that all dividend investors are "brainwashed" is going overboard by quite a bit.
GoneOnTilt wrote: Wed Oct 13, 2021 10:44 am With this kind of sound reasoning, I wonder why there is so much opposition to dividend investing on this forum?
Bottom line for me... I wish the anti-dividend hound dogs would stop hounding people who haven't done anything wrong.
Bonds were designed specifically to pay interest as the only possible return if held to maturity. There is no controversy there, you would have to be an idiot to lend money to a for profit company for no compensation at all. The form of compensation has gotten creative over time. You can get fixed or floating rates, or yes discount bonds (so called zero coupon) which is still earning income but all paid at once and accrued rather than paid). Zero coupon is a misnomer, you are just earning a custom yield based on the discounted price paid and waiting to get it in one payment. But still “receiving interest”. Why do stocks have to work same as bonds. And if same why have both ? They serve a different purpose for issuer and investor, and are taxed differently, all for good reason.

Yes some companies go bankrupt.
If you buy index funds this comes out in the wash.
If you buy actively managed funds, you are paying them to sell high, before the company dies.
Imagine if instead of inventing the iphone, Apple took most of the profits from Mac and gave it away to shareholders ?
What if Amazon stuck to books selling and gave the profits back to shareholders 20 years ago ? Extremes demonstrate a point, of course most do not pay all their profits in dividends.

So if you like something then it’s fine.
So keep smoking cigarettes, drive 110mph on the expressway, eat all the ice cream you want (no salad).

Nobody is hounding anyone. OP stated that Bogle loved dividends and many others do not, wanted to understand the controversy. If you do not understand why there is controversy or are not interested in it, why respond on this thread ? The OP nor me are personally hounding you nor criticizing your enjoyment of your preferences. I will leave that to your doctor and local highway patrol. Personally I do not lose sleep at night because I receive dividends, nor do I depend on them to pay my bills. The issuer is totally in control so I may get paid too little for my needs, or paid too much and then suffer taxes. With bonds one can buy them specifically to get a fixed level of income you seek. I can choose a fixed rate bond for fixed cash flow if I prefer. I can buy a zero/discount bound if I want to fund a specific liability at some point in the future. Floating bonds can be a good cash substitute similar to money market funds. Stocks serve none of those purposes. You buy them for growth, unspecified return at an unspecified date in the future. The dividends are just random sales of a part of what you decided to buy. DRIP/auto-reinvest “fixes” that in an IRA etc. No way to fix it in a taxable account, other than buy growth oriented or tax-managed funds that seek companies that reinvest in themselves to maximize future growth. Not saying you are wrong to spend your dividends, I take them in taxable as cash but do not rely on them. I just do it to avoid more tax lots, wash sales (if we ever have unrealized losses again :-) Given the performance of growth stocks over broad market indices over last decade, probably would have been wise to go with the lower dividend growth stock index for not only higher after tax return but pre tax too. In an IRA I wouldn’t do that (diversification is good and no taxes) but that does not change the fact that dividends are not a reliable source of income nor are they a reason to buy stocks over bonds. Yeah, I know div rates are now higher than most bonds…equity issuers can cut dividends whenever they choose, and usually do so when times are tough for them. You can easily lose more than past cumulative dividends received when that occurs. So if you buy and hold forever, dividends wont save you. You still need to sell predicted losers or buy an index fund and ignore it as noise.
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Re: John Bogle on Dividends

Post by Da5id »

burritoLover wrote: Tue Oct 19, 2021 6:31 am "The Plight of the Dividend Lover" - a Haiku by burittoLover

Magic dividends
Leave me alone you haters
I will get my cash
OK, this was funny :) I can write them for either side.

Checks in the mailbox
Are like manna from heaven
What's total return?

Dividend haters
Their words roll off my shoulders
I’ll just cash my check.
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Re: John Bogle on Dividends

Post by burritoLover »

Da5id wrote: Tue Oct 19, 2021 7:57 am
burritoLover wrote: Tue Oct 19, 2021 6:31 am "The Plight of the Dividend Lover" - a Haiku by burittoLover

Magic dividends
Leave me alone you haters
I will get my cash
OK, this was funny :) I can write them for either side.

Checks in the mailbox
Are like manna from heaven
What's total return?

Dividend haters
Their words roll off my shoulders
I’ll just cash my check.
:) :sharebeer
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Re: John Bogle on Dividends

Post by CyclingDuo »

HanSolo wrote: Tue Oct 19, 2021 12:27 amBottom line for me... I wish the anti-dividend hound dogs would stop hounding people who haven't done anything wrong.
In the spirit of the discussion, there is plenty of information "out there" to read regarding pros and cons of certain types of investing - including dividend investing.

I always enjoy reading the Hartford Fund's annual/quarterly Insight Document. It's just one to mix into all the other things I read, but certainly draws conclusions on the pro side. No worries though, as there certainly is no shortage of things to read that draw conclusions on the con side. More so, in fact. :beer

https://www.hartfordfunds.com/dam/en/do ... /WP106.pdf

If one owns the Total US and Total International Index Funds, what is the current percentage of dividend paying stocks in those indices? I believe I once read it was something like 53% were dividend paying, and 47% were not, but I don't have the more recent numbers to confirm or dispute that. Does anybody know those numbers? I know over 400 companies pay dividends in the S&P 500, but would be curious what it is for the Total US and Total International funds.

Regardless, for those of us who do own the index funds - we all get to deal with dividends on a quarterly basis. How we spend them, how we reinvest them, how we pay taxes on them all remains a strategic focus in our household.

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Re: John Bogle on Dividends

Post by HanSolo »

Da5id wrote: Tue Oct 19, 2021 6:50 am If I understand your standard, there should be little discussion of investing in bogleheads.
No. I was just trying to point out the difference between saying "I don't have a dividend tilt because of (whatever reasons)" vs. "if you have a dividend tilt, you're doing something wrong." I'm in favor of discussion, and I think the former is more civil. I get that some people don't understand the difference.

I've never heard any dividend tilters say "growth tilters are wrong" or "broad-market indexers are wrong."

Some people are OK that different people do different things, and some aren't, apparently. Let's call it an interesting asymmetry. Why that happens is, I think, the core question.

If someone understands exactly what they're doing (whether it's a dividend tilt, international, ESG, junk bonds, a bond-only portfolio, or whatever), and you think there's a problem, then who is it that has a problem?
I think presenting reasons (ideally for my personal preferences with supporting data) for and against investing in any particular way is a legitimate topic in bogleheads.
Yes, I agree. That's what I did. And I'm not seeing how the haiku thing fits in with your idea.
For me, continuously attempting to discourage those who disagree with your POV from posting isn't a reasonable stance as long as they are following forum guidelines.
I can't speak for the forum guidelines, but I'm not sure that telling other forum members that they are "brainwashed" or that they are being fooled by a "mirage" is a way to engage in civilized discourse. I think it's reasonable to discourage that.
beyou wrote: Tue Oct 19, 2021 6:51 am Zero coupon is a misnomer, you are just earning a custom yield based on the discounted price paid and waiting to get it in one payment.
I brought that up because your only objection to dividend stocks was that you can't control the timing and amount of generating returns. Regardless of what they're called, zero-coupon bonds would be a way to solve that problem in the bond sphere, as you can control the timing by getting the desired maturity date or selling the bond when you want. I thought that this would be of interest to people who need to control the timing and amount of their income.
Why do stocks have to work same as bonds. And if same why have both ?
"Have to" sounds like restricting options. Nobody proposed that. As far as I've seen, dividend investors are totally OK that all choices are available. It's only the anti-dividend advocates that seem to object to one of the options even existing (stock dividends being a "mirage", an artifact of the "stone age", "brainwashing", etc.).

When only one side objects to the mere existence of certain choices, and the other doesn't, that's an interesting asymmetry, isn't it?

I'm afraid of what would happen if we started talking about convertible bonds and preferred stock. I guess for some people, the mere existence of those must be a serious irritant.
Imagine if instead of inventing the iphone, Apple took most of the profits from Mac and gave it away to shareholders ?
I've never heard a dividend investor say or imply that non-dividend-paying companies should not exist or that people shouldn't invest in them or tilt toward them, if that's what they want to do.

That's an interesting asymmetry, is it not?
So keep smoking cigarettes, drive 110mph on the expressway, eat all the ice cream you want (no salad).
I've never heard a dividend investor make the above kind of analogy toward growth tilters, broad-market indexers, etc.

Again, an interesting asymmetry.
Nobody is hounding anyone. OP stated that Bogle loved dividends and many others do not, wanted to understand the controversy. If you do not understand why there is controversy or are not interested in it, why respond on this thread ?
Why respond on this thread? To point out some interesting asymmetries in the discourse. Especially when they help to answer the OP's question.
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Re: John Bogle on Dividends

Post by Da5id »

HanSolo wrote: Tue Oct 19, 2021 9:22 am
Da5id wrote: Tue Oct 19, 2021 6:50 am If I understand your standard, there should be little discussion of investing in bogleheads.
No. I was just trying to point out the difference between saying "I don't have a dividend tilt because of (whatever reasons)" vs. "if you have a dividend tilt, you're doing something wrong." I'm in favor of discussion, and I think the former is more civil. I get that some people don't understand the difference.
Great, so we have no problem here. If those who believe that total return investing is The Way want to argue against those advocating a dividend tilt, seems totally fair to me.

I'm in favor of international stocks for example. Those who favor 100% US stocks advocate against my position, probably more than people advocate against dividend focused investing. And I think that is fine.
Da5id wrote:
HanSolo wrote: Tue Oct 19, 2021 9:22 am I think presenting reasons (ideally for my personal preferences with supporting data) for and against investing in any particular way is a legitimate topic in bogleheads.
Yes, I agree. That's what I did. And I'm not seeing how the haiku thing fits in with your idea.
The haikus were lighthearted. I think there is room for that in the forums as long as it isn't malicious or trolling. Mine hopefully won't be seen in that spirit, they certainly weren't intended that way.
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Re: John Bogle on Dividends

Post by burritoLover »

HanSolo wrote: Tue Oct 19, 2021 9:22 am I've never heard a dividend investor say or imply that non-dividend-paying companies should not exist or that people shouldn't invest in them or tilt toward them, if that's what they want to do.
Really? You missed the various "greater fool" discussions about non-dividend paying stocks here on BH?
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Re: John Bogle on Dividends

Post by HanSolo »

burritoLover wrote: Tue Oct 19, 2021 9:33 am
HanSolo wrote: Tue Oct 19, 2021 9:22 am I've never heard a dividend investor say or imply that non-dividend-paying companies should not exist or that people shouldn't invest in them or tilt toward them, if that's what they want to do.
Really? You missed the various "greater fool" discussions about non-dividend paying stocks here on BH?
That's the thread where I said, "It seems the main reason these debates go on endlessly is that some people consider it a problem that different people actually want to do different things", and, "I make no claims about what choices are valid or invalid."
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Re: John Bogle on Dividends

Post by burritoLover »

HanSolo wrote: Tue Oct 19, 2021 9:54 am
burritoLover wrote: Tue Oct 19, 2021 9:33 am
HanSolo wrote: Tue Oct 19, 2021 9:22 am I've never heard a dividend investor say or imply that non-dividend-paying companies should not exist or that people shouldn't invest in them or tilt toward them, if that's what they want to do.
Really? You missed the various "greater fool" discussions about non-dividend paying stocks here on BH?
That's the thread where I said, "It seems the main reason these debates go on endlessly is that some people consider it a problem that different people actually want to do different things."
That isn't the only thread and there have been various dividend tilters that have said as much about the greater fool's non-dividend paying stocks. Dividend tilters have no special significance as far as being questioned. You come on here wanting to tilt to QQQ, small cap value, momentum, sectors, currencies, whatever, others will try to poke holes in your claims. But, when you can't back up your claims with any logical discussion, I guess it would it feel like getting attacked - since everything you believe in regards to your investment strategy is hanging on by a thread. And some part of your brain is wondering if all these people might be right.
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Re: John Bogle on Dividends

Post by HanSolo »

burritoLover wrote: Tue Oct 19, 2021 10:15 am That isn't the only thread and there have been various dividend tilters that have said as much about the greater fool's non-dividend paying stocks.
Perhaps there were... just not as memorable since they don't surface as often.
But, when you can't back up your claims with any logical discussion,
I did that, upthread.
I guess it would it feel like getting attacked - since everything you believe in regards to your investment strategy is hanging on by a thread. And some part of your brain is wondering if all these people might be right.
OK, so you claim to know the motivations behind my posts (I'm not sure how that sits with the posting guidelines) and what's going on in my brain.

I have not issued those kinds of commentaries about you.

Interesting asymmetry.
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Re: John Bogle on Dividends

Post by burritoLover »

HanSolo wrote: Tue Oct 19, 2021 10:25 am
burritoLover wrote: Tue Oct 19, 2021 10:15 am That isn't the only thread and there have been various dividend tilters that have said as much about the greater fool's non-dividend paying stocks.
Perhaps there were... just not as memorable since they don't surface as often.
But, when you can't back up your claims with any logical discussion,
I did that, upthread.
I guess it would it feel like getting attacked - since everything you believe in regards to your investment strategy is hanging on by a thread. And some part of your brain is wondering if all these people might be right.
OK, so you claim to know the motivations behind my posts (I'm not sure how that sits with the posting guidelines) and what's going on in my brain.

I have not issued those kinds of commentaries about you.

Interesting asymmetry.
I'm only guessing - it is just interesting that these discussions almost always devolve into the one side claiming they are being attacked for how they invest. But, since you claimed you backed up your discussion logically, I would love for you to explain the mechanics behind the relative stock price dropping by the dividend amount on ex-div but then the market forgets and it goes back up to its original price days later. How exactly does that work - why does the market have amnesia after a period of days?
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Re: John Bogle on Dividends

Post by HanSolo »

burritoLover wrote: Tue Oct 19, 2021 10:33 am I'm only guessing - it is just interesting that these discussions almost always devolve into the one side claiming they are being attacked for how they invest.
There are two camps: (a) those who claim that those who don't invest the way they do are wrong, and (b) those who are OK with others making choices that are different from their own.

That is the core issue.
But, since you claimed you backed up your discussion logically, I would love for you to explain the mechanics behind the relative stock price dropping by the dividend amount on ex-div but then the market forgets and it goes back up to its original price days later. How exactly does that work - why does the market have amnesia after a period of days?
I find it fascinating that I'm being asked to explain something that's totally unrelated to anything I've ever said.

I have not asked you to do such a thing.

Again, interesting asymmetry.
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Re: John Bogle on Dividends

Post by muffins14 »

This thread is exhausting and should probably be locked at this point. It seems like all HanSolo is saying is that people will have capital-R Reasons for things and preferences, and basically their preferences are the only thing that matter to them.

It’s a fair point, even if the investor preference is not optimal for them, they prefer it, thus making it optimal in some dimension.

There’s really no use to continuing to elicit these incredibly vague, evasive, circular discussions again and again
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Re: John Bogle on Dividends

Post by burritoLover »

HanSolo wrote: Tue Oct 19, 2021 10:42 am I find it fascinating that I'm being asked to explain something that's totally unrelated to anything I've ever said.
Whoops - guess I mixed you up with another dividend tilter. Probably because I see all of you as the same with my extremely biased viewpoint. To set the record straight, what is your position on the following about stock dividends:
1. Does the relative share price drop by the dividend amount on the ex-div date?
2. Does the dividend increase your net worth?
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Re: John Bogle on Dividends

Post by burritoLover »

muffins14 wrote: Tue Oct 19, 2021 10:54 am This thread is exhausting and should probably be locked at this point. It seems like all HanSolo is saying is that people will have capital-R Reasons for things and preferences, and basically their preferences are the only thing that matter to them.

It’s a fair point, even if the investor preference is not optimal for them, they prefer it, thus making it optimal in some dimension.

There’s really no use to continuing to elicit these incredibly vague, evasive, circular discussions again and again
The problem isn't the style of investing that you choose - it is the claims being made - like receiving a dividend is better than selling in a depressed market as that is "locking in your losses". There are new investors on here all the time - not refuting claims like these is a disservice to those investors who should have the correct information - especially with a topic like dividends which can be easily misunderstood.
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Re: John Bogle on Dividends

Post by HanSolo »

muffins14 wrote: Tue Oct 19, 2021 10:54 am This thread is exhausting and should probably be locked at this point. It seems like all HanSolo is saying is that people will have capital-R Reasons for things and preferences, and basically their preferences are the only thing that matter to them.
If you mean this is what all investors do, then... I guess. I only meant what I said, not sure about the above.
It’s a fair point, even if the investor preference is not optimal for them, they prefer it, thus making it optimal in some dimension.
If you're implying that it's even possible to determine what's "optimal" for a given person, I'm not sure. I'm not sure Bogle was sure. Maybe that's why he presented various different models and options for people, which I consider reasonable. Some people don't like some of those options, and I think they just need to relax a little.
There’s really no use to continuing to elicit these incredibly vague, evasive, circular discussions again and again
I've tried to be as clear, explicit, and on-topic as I can.
burritoLover wrote: Tue Oct 19, 2021 10:55 am
HanSolo wrote: Tue Oct 19, 2021 10:42 am I find it fascinating that I'm being asked to explain something that's totally unrelated to anything I've ever said.
Whoops - guess I mixed you up with another dividend tilter. Probably because I see all of you as the same with my extremely biased viewpoint. To set the record straight, what is your position on the following about stock dividends:
1. Does the relative share price drop by the dividend amount on the ex-div date?
2. Does the dividend increase your net worth?
I know exactly how dividends work, but I'm not sure that the mechanics of that are on-topic for this thread. Feel free to start a new thread, if you feel a need to pursue that.
Last edited by HanSolo on Tue Oct 19, 2021 11:07 am, edited 1 time in total.
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Re: John Bogle on Dividends

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HanSolo wrote: Tue Oct 19, 2021 11:06 am I know exactly how dividends work, but I'm not sure that the mechanics of that are on-topic for this thread.
A non-answer - exactly what I expected.
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Re: John Bogle on Dividends

Post by HanSolo »

burritoLover wrote: Tue Oct 19, 2021 11:07 am
HanSolo wrote: Tue Oct 19, 2021 11:06 am I know exactly how dividends work, but I'm not sure that the mechanics of that are on-topic for this thread.
A non-answer - exactly what I expected.
OK, if you want to use this thread for that purpose, feel free to provide your own answers to those questions, and we'll see if we can help.
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Re: John Bogle on Dividends

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