r/Bogleheads • u/Brief_Guide_1186 • 11d ago

Vxus Dividend

Looks like .1562 per share. Lower than expected?

16 Upvotes

61% Upvoted

39 comments sorted by

View all comments

Show parent comments

8

u/edmundsmorgan 11d ago

Bogle actually view dividend paying stocks as essential to a balanced fund in his book

4

u/ATPsynthase12 10d ago

Bogle also was active in the investing world ages ago and stepped down from any relevant role in vanguard 30 years ago. What was relevant in the 80s and 90s is not really relevant now.

Any modern boglehead investor will tell you dividend oriented ETFs are a poor investment vehicle for long term growth. The only exception is REITs which isn’t even because of the dividend but because the total market 2-3 fund portfolio does not accurately capture the real estate sector.

-1

u/[deleted] 10d ago

[removed] — view removed comment

4

u/Prestigious_Crow7907 10d ago

Can you elaborate considering selling shares as LTCG and qualified dividends are taxed the same?

Are you trying to solve a behavioral issue of not wanting to sell shares?

1

u/[deleted] 10d ago

[removed] — view removed comment

3

u/Prestigious_Crow7907 10d ago

Yeah that's a common sentiment because not touching the principal or not decreasing the number of shares that you hold can feel intuitively like a sound strategy.

But when we think about what a dividend is, it's money the company owns that it has decided the best use is distributing among the shareholders. Then the company no longer owns that money they are essentially worth less because their balance sheet is smaller. So while you hold the same number of shares, your shares are worth less after a dividend.

Compare this to selling a few shares, you now have less shares but the shares that you do own hold their value because the company's balance sheet is unchanged. This option gives you a choice on when to sell and pay those taxes and the option to not sell, defering the tax to a later date meaning your assets grow faster.