It's true that dividends could get cut. I wouldn't say "all the time." Companies are reluctant to cut them because a cut affects the stock price negatively. But for me, the most important point is that public companies have limited control over their stock prices and absolute control over their dividends. If you're afraid of getting a divvy cut (like me), pick a dividend ETF. 100+ dividend-paying stocks are your insurance against shit happening. Even if one or two companies decide to cut their divvies, that will hardly affect your payout.
Hi Denis, thanks for your comment. ‘All the time’ may have been pushing it with hindsight.
My more broad point is that I am not a fan of restricting one’s investable universe in any way. In order to ensure that I am in the winners of the future I need to buy everything - if I focus exclusively on stocks that pay a dividend I may experience huge opportunity cost elsewhere.
Here in the UK, many private clients take a ‘dividend yield’ focussed approach, which has seen them largely or totally avoid US markets. This has, obviously, not led to great outcomes.
It's true that dividends could get cut. I wouldn't say "all the time." Companies are reluctant to cut them because a cut affects the stock price negatively. But for me, the most important point is that public companies have limited control over their stock prices and absolute control over their dividends. If you're afraid of getting a divvy cut (like me), pick a dividend ETF. 100+ dividend-paying stocks are your insurance against shit happening. Even if one or two companies decide to cut their divvies, that will hardly affect your payout.
Hi Denis, thanks for your comment. ‘All the time’ may have been pushing it with hindsight.
My more broad point is that I am not a fan of restricting one’s investable universe in any way. In order to ensure that I am in the winners of the future I need to buy everything - if I focus exclusively on stocks that pay a dividend I may experience huge opportunity cost elsewhere.
Here in the UK, many private clients take a ‘dividend yield’ focussed approach, which has seen them largely or totally avoid US markets. This has, obviously, not led to great outcomes.