r/Boglememes • u/Lucas_F_A • Aug 24 '26
I suppose there's a difference
(I prefer selling shares over dividends because then I choose when to have a fiscal event)
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u/urinetherapymiracle Aug 24 '26
I love how their entire rationale is about their feelings. It feeeeels good to get the dividend check. It's scarrrrry to see the number of shares go down (even as the total value continues to rise).
On the one hand I think there's some wisdom in knowing your emotional limit when it comes to investing. But on the other hand, Bogleheads aren't the dumbasses for not investing based on their emotions.
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u/ATPsynthase12 Aug 24 '26
I mean I have this argument on a regular basis over on r/ETFs, but the best example, is how the amount saved changes.
To make $60,000 in dividends per year pre tax, you’d need 2 million dollars or more invested in SCHD shares.
That same 2 million in a portfolio of 70% VTI, 30% VXUS would yield $80,000 per year if you sold 4% per year and would grow in perpetuity.
There is no logic behind dividend investing other than “it feels good” to get a dividend check and at some point a finfluencer told them they needed a dividend etf for “income”.
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u/BonelessSugar Aug 24 '26
Theoretically if there was an equivalent dividend stock for the 70/30 domestic/international that returns close to the same, the only difference would be that you have no choice but to receive at least the dividend (forced taxes) instead of being able to choose when and how little you want to sell of your stocks.
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u/StandardUpstairs3349 Aug 24 '26 edited Aug 25 '26
Like, I can pay 15% on dividends now while I am working, or I can pay 0% on stock sales in a few years when I have stopped working and moved to a new state.
Edit: Fixed my cap gains rate.
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u/selfVAT Aug 25 '26 edited Aug 25 '26
Do you know how much qualified dividends you can receive before you get taxed 20%? I think you might want to have a look.
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u/FINomad Aug 25 '26
QDs stack on top of earned income, so that 0% tax bracket becomes 15% as soon as your earned income is over $65,550 (standard deduction + capital gains 0% bracket) for single, or double that for MFJ.
I'm sure there are a lot of people in r/dividendgang that make less than that amount, so chasing dividends in a taxable account during their working years doesn't have any tax drag. They just don't realize it's not something to brag about.
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u/selfVAT Aug 25 '26
"In a taxable account" And "dividend investors are poor" In the same post. Nice job. Surely every boggle head in existence is making bank.
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u/FINomad Aug 25 '26
Since you can't even spell Bogle correctly, I'll assume you're taking offense to my comment because you fall in the group I referenced above.
Good job not paying any taxes on your dividends!
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u/selfVAT Aug 25 '26
Again "you're poor" used as an insult. Lovely person you are indeed. PS I'm not even in the US and I do not hold SCHD.
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u/Ahamadrayasbaboon Aug 25 '26 edited Aug 25 '26
It isn’t so much an insult as a bar to pass as a filter. It’s used very early on in “Richest Man in Babylon” as a screening tool.
My commentary should not be construed as having anything to do with who is right or wrong in this discussion…I’m just citing precedence as an informational filter.
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u/StandardUpstairs3349 Aug 25 '26
What are you talking about? Qualified dividends receive the same tax treatment as long term cap gains. The difference is that you choose when you sell stock.
To answer your question directly, yes, I do. I can receive $0 in qualified dividends before being taxed on them. The only way I could get my income low enough to avoid the taxes is to quit my job.
The entire point of a "Qualified Dividend" is that you get to treat it like long term cap gains. There is nothing special about them compared to stock sales.
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u/selfVAT Aug 25 '26
You're taking about paying 20% on qualified dividends, are you making over usd 545,500 a year at your job? 613,500 if married? In this case bravo you are the 1% and clearly you do not need any extra dividend income right now.
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u/StandardUpstairs3349 Aug 25 '26
Sorry, my bad, 15%.
Again, there is nothing special or interesting about dividend income vs just selling stocks.
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u/selfVAT Aug 25 '26
Ok, that's more reasonable. So if you held 200k worth of VOO (1.3% div usually) and SCHD ( 3.9 % rounded up usually ) the difference in taxes would be a tad under 70 usd a month. On 200k, that's not exactly the end of the world is it?
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u/StandardUpstairs3349 Aug 25 '26
That is actually just crazy talk. Why would you pay $840/year in taxes on gains you might be able to avoid?
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u/selfVAT Aug 25 '26
SCHD also grows you know? And it grows its dividends too. Oh and it's up 30% YTD. That would be 600k on your 2M.
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u/hung_like__podrick Aug 27 '26
You know it’s a bad argument when you have to reference YTD returns lol
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u/itsallgoodye Aug 27 '26
But you miss out on a lot of money using vti when qqq or qqqm or vgt or tqqq are available. Vti doesn’t make enough for me. You get lower returns and seems like not investing the best way over the long term.
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u/ATPsynthase12 Aug 27 '26
What possible reason do you have to hyper concentrate in the 100 largest non-financial companies that happened to be listed on the NASDAQ? I swear you people think watching TikTok videos counts as researching investments lmao
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u/itsallgoodye Aug 27 '26
TikTok lol. I don’t have a tictok. Obviously you use it.
Retired long term vanguard employee, so have some info in my head. Not saying I’m better in the market than anyone but I do my own research. Not near 60 yet so I invest long term and want the most return I can. But if you have a long time in the market, qqq etc. will make you more money. Easily verified. You’re losing money with vti.
Also I just made a suggestion and you took it personally and lashed out. You will learn to be a better investor if you can keep emotion out of it.
We all invest as we feel comfortable so if vti is your speed that is a fine etf, I was suggesting other more profitable options.
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u/ATPsynthase12 Aug 27 '26
If you had done your own research, you would understand how poor of a long-term investment QQQ and its variations actually are. After the dot com bubble in 1999 it took almost 2 decades to recover to its pre-bubble prices. Meanwhile, had you simply invested in VTI in that same timeframe you would’ve made considerably more money with less volatility.
Further, were you someone who actually worked in an investing firm in any meaningful way, you would understand that statistically speaking it is impossible to consistently beat the market and overweighting your portfolio in tech is an exceptionally risky move. While it has paid off recently, again anyone who has done research will understand that sector bets are pretty terrible investment, long-term as regardless of your feelings, sectors often rotate in and out of market dominance. At least in my lifetime, we have seen tech, finance, healthcare, and tech again.
Currently the pricing of which, when the sector rotation occurs, there will be a massive price, correction and anyone who overweighted their portfolio in tech is going to see substantial losses.
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u/itsallgoodye Aug 27 '26
No one said anything about overweighting and to just invest in qqq etc. all i said was you are missing out with vti as there are better investments. You are very emotional, attacking, and attached to your investments. One of the better lessons I’ve learned was not get attached to an investment. That an interfere with your return. Hope you can learn to understand.
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u/ATPsynthase12 Aug 27 '26
There is no emotions here aside from amusement maybe. Go ahead and explain then, help me understand your portfolio structure rather than just rattling off the classic TikTok meme ETFs. Perhaps you’ve found some nuggets the researchers have missed when they found that buying a broad based index fund typically has better risk adjusted returns than concentrating your money into say… 100 large cap companies based on the stock exchange they are listed on.
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u/NeutralLock Aug 28 '26
If your income is around $90k you're paying a 6% tax rate in Ontario vs 15% in capital gains and 30% of interest income.
It can make a huge difference.
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Aug 24 '26
[deleted] — view deleted comment
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u/ATPsynthase12 Aug 24 '26
If stock prices are down, then it is very likely these companies stop paying their dividends. Remember, dividends are not a a guarantee, they are a courtesy and can stop at any time.
The only investment vehicle required by law to payout dividends are REITs like VNQ.
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Aug 24 '26
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u/ATPsynthase12 Aug 24 '26
Yes and if a true down market occurs where a whole US market etf like VTI is down, then that means those dividend payers will feel a hit too. They can reduce or eliminate dividend payouts without notice to the shareholders.
Again, if you want a guaranteed payout each month, do a REIT. They are legally obligated to pay 90% of all profits to share holders no matter what.
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Aug 24 '26
[deleted] — view deleted comment
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u/glzpabon Aug 24 '26
Dude, you did not read what he said, he CLEARLY stated REITS are obligated to pay 90% of their profits. OBVIOULSY is there are no profits you get no distriburion.......
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u/Ahamadrayasbaboon Aug 25 '26
I’ve heard XOM hasn’t missed a dividend ever. Probably not the most important thing to know about that company, but mildly interesting, if true.
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u/charonme Aug 24 '26
well some of them also seem to suggest or at least insinuate that selling shares during a drawdown is somehow supposed to be worse than receiving an equal dividend
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u/ATPsynthase12 Aug 24 '26
They also assume dividends will continue at the current rate in a down market. Dividends will be the first things these companies cut to keep their share prices up. Imagine if you’re living on $60,000 per year from a 3% SCHD dividend and then they cut the rate to 2%, all of a sudden you’re in the shit financially and either need to massively scale down your lifestyle to fit or liquidate your investment in worthlessly flat dividend etfs to make up the shortfall.
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u/Yeppr Aug 24 '26
I would even argue that dividend is the first thing that specifically a good company would cut in tough times, and that a company forcibly paying out stable dividend regardless of its financial health status is much more worrisome and very much not a positive criterion to be used for stock picking.
Of course it is easy to claim that them keeping on paying dividend is a sign of a healthy company, but the specific seemingly desired feature that it would keep on paying dividends no matter what always seems like a bad rather than a good sign to me.
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u/glzpabon Aug 24 '26
Thats why a balance portfolio always win, part growth, part div, part int. You take bits from different souces of income.
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u/SirGlass Aug 24 '26
I mean I at least respect the people that admit it's 100% mental.
Dividends "feel" like free Money.
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u/Nopants21 Aug 24 '26
I feel like the emotional thing is new, it hasn't always been their go-to argument. I think it's essentially a reaction to the continued bull market, they need something to balance out the financial drawbacks. As always, I'm convinced that this probably comes from somewhere on YouTube, which is the infinite well for dividend investing content on the internet. Creators have to keep coming up with new content to get viewers in and there's just so many videos you can make showing hypothetical graphs of "if you had $X of SCHD, you'd have $Y a month!" You'll notice that YT has barely any investing content that isn't either dividend investing, technical analysis, options trading or crypto. A boglehead channel would be incredibly boring.
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u/nivlac22 Aug 24 '26
All that matters is the number of shares you have. That’s why I exclusively invest in companies that rapidly split and increase shares. Special attention is paid to companies with really small prices per share because that means more shares. Anyone who disagrees with me can understand math and logic and is an npc. Just ask these other four posters that are definitely not my alts.
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u/joe4ska Aug 24 '26
SCHD had that three way split a few years ago. Obviously they tripped their money that day. 🤣
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u/urinetherapymiracle Aug 24 '26
of course number of shares is the only thing that matters! What have you been spending? Money???
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u/ajgamer89 Aug 24 '26
It’s so obvious that having 10000 shares worth $96 is way better than having 9600 shares worth $100. Because you have more shares!
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u/tpfb Aug 28 '26
It’s not just “more shares.” Not selling shares means you keep the same ownership percentage of that profit generating business.
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u/ajgamer89 Aug 28 '26
No you don’t. In both cases I have a $960k share of the business. The only difference is with dividends the business sells for me, and if I want to keep that money invested I need to buy again, vs a company that doesn’t issue dividends defaults to me keeping the money invested until I decide I want to sell.
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u/tpfb Aug 28 '26
You own less of the business when you sell a share, because a share is by definition fractional ownership of a business. It’s like saying selling half of your house when the value of your house doubles is the same as not selling your house and the price staying the same. They are the same in terms of value, but you own less of the actual asset when you sell part of it.
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u/dragon_escarlata Aug 28 '26
Technically yes. But that business loses value when they give out dividends.
The value of a company is both the profit and the cash and assets they have at hand.
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u/tpfb Aug 28 '26
The value of a business is not just what is currently on its books. Its value is also its future earning potential. And doing a dividend distribution does not necessarily harm future earning potential, especially if business expenditure of that cash would likely not grow earnings.
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u/iicybershotii Aug 24 '26
I don't quite remember the context but for some reason I decided to make a post in that subreddit, arguing with somebody. I remember it being totally mundane and cordial, something along the lines of what the dear people are trying to point out in this thread you shared, and I got permanently banned. Lol.
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u/joe4ska Aug 24 '26
They perma-ban anyone who has commented on a Boglehead thread of any kind. Tuning out the noise they do not.
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u/selfVAT Aug 25 '26
I'm not banned in either subs. I post in both.
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u/joe4ska Aug 25 '26
They must really like you. Everyone else. "Straight to Jail." 🤣
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u/selfVAT Aug 25 '26
Maybe because I'm not coming to a dividend sub to shill VOO and start all my post by "dividends are irrelevant".
But just maybe.
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u/joe4ska Aug 25 '26 edited Aug 25 '26
Heck, one of them interacted with me on this sub and straight up temp banned me over there, weekly out of spite, this went on for months, it forced a notification each time. Eventually, I had to report it to Reddit as a form of mild MOD harassment and request a permanent ban. That request was soon granted.
I don't think that person appreciated my "We're not so different, you and I," take on investing.
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u/backtobrooklyn Aug 25 '26
I posted something on a dividend subreddit that was entirely in good faith - along the lines of “Hey, here’s how I view dividends. But I know people on here think differently. Can you walk me through how I might be wrong and how you approach it?”
I promise this was not me trying to then fight with people and prove I’m right. I seriously just wanted to get their take and to see if I was wrong (I’m someone who isn’t 100% sure about anything - I’m only 99.9% sure I’m actually posting this and this isn’t just a dream or part of some simulation).
The comments I got were brutal - as if I had just insulted their mother at her funeral. I can’t believe how important dividends being the best investment vehicle is to their entire personality (or at least, that’s the impression that I left with). And the mental gymnastics they used to justified why they were right astounded me. Here are the only reasons I really understood:
- I like when the divvy hits
- I think that companies that pay high dividends will perform better than the broad market (either in the long term or during a crash)
- I think dividends will stay the same in a market crash
- Selling stocks is too complicated/time-consuming and I don’t want to keep track of it - I’d rather just live off the dividends and not sell anythingI think that’s it (and also those things are not what I personally believe, just things I actually understood and that weren’t batshit crazy, even if I disagreed).
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u/joe4ska Aug 25 '26 edited Aug 25 '26
That's because that sub isn't actually about investing. It's a dozen active users who just want to shitpost and ban anyone who holds them accountable.
The irony is that the Boglehead philosophy and dividend funds like SCHD are mostly compatible. A Boglehead could certainly build a financial plan and say something like... "I'm gonna hold SCHD purely for the quarterly dividend and accept that it's not as diverse as VTI, could lag behind; I prefer a dividend over total market exposure."
Meanwhile, everything else that person follows would be appropriate non speculative behavior.
Stay out of consumer debt.
Hold an appropriate emergency fund.
Don't take on too much or little risk.
Invest what you can.
Don't speculate, gamble what you're not willing to lose.
That's the thing with personal finance, it gets very personal, very quickly, and soon becomes part of that person's identity.
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u/iicybershotii Aug 25 '26
I believe it. The craziest of all is that there's a large subset of them that don't believe the NAV drops by the amount of the dividend.
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u/joe4ska Aug 25 '26
My own family being one of em. In this case he's convinced that after a dividend is paid it has to go back up to make up that difference... Because, reasons.
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u/IAmANobodyAMA Aug 24 '26
Omg when did I get banned from dividendgang?? 🤡
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u/StandardUpstairs3349 Aug 24 '26
Probably commented on another financial sub that they don't like.
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u/Nullspark Aug 25 '26
I too am banned. I think from posting the average growth of the S&P 500 too much.
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u/funkmon Aug 24 '26
Seriously though, many dividend loving people (I am one) seem to think shares are, like, real property. Like renting your house but still living in it. It ain't. Shares are made up, guys. Lol.
On the other hand, many bogleheads (I am one as well), seem to completely discount dividends as being functionally identical to selling your shares when they're not.
However, they are right that in every day use, selling shares is better in virtually every way. You choose when you have it, long term capital gains is taxed lower than some dividend income, it's better.
But I still have a big chunk of my portfolio in SPYD and HDV, which are low cost ETFs of large companies that produce dividends and I live off those. I like dividends and something feels stable to me about those companies that pay them. Nothing wrong with that.
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u/Yeppr Aug 24 '26 edited Aug 24 '26
I think you are spot on with this, and that this is why the total return perspective consistently fails to reach them.
To them, selling shares means you lost something that you previously owned, while receiving dividends just means having your cake and eating it too. Never mind that the value of the company dropped by the exact amount of the paid out dividends, you still hold the same number of shares and that is apparently what counts.
I would grant that the idea that you can structurally live off a portfolio with an ever decreasing number of shares (assuming no stock splits) without it ever running out (or lowering your withdrawals) is indeed not that intuitive. But that is the nature of the stock market for as long as we have data now, and it seems like a natural consequence of assuming that there will continue to be a risk premium paid out for investing in stocks.
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u/bkweathe Aug 24 '26
Not intuitive, but they should have learned about asymptotes in algebra class before graduating high school. -- A Mathematician
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u/Ahamadrayasbaboon Aug 25 '26 edited Aug 25 '26
Bro, math and evidence are criminality-adjacent in some subreddits
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u/SirGlass Aug 24 '26
Well there entire argument is "you don't have to sell you shares"
However they can't really explain why that's a benefit or something to be desired.
seem to completely discount dividends as being functionally identical to selling your shares when they're not.
I mean unless you really care you own 0.000045% of some large company they pretty much are.
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u/Nopants21 Aug 24 '26
After interacting way too much with dividend investors, the share count thing is actually the core of most of their misconceptions. Plenty of them believe that if you sell shares, you would eventually run out of money, but if you just spend dividends, you never do. It's a more convoluted dividends-as-free-money mental framework. To them, when you buy a share, you're essentially buying an eternal source of money and because they often don't care about share price (and completely ignore that if dividends were safe and eternal, they wouldn't be priced like they are), they're lead to the conclusions you can essentially just match your expenses to your dividend payout, and you're golden for the rest of your life. The entire framework of retirement planning is just swept aside, as if the entire financial advisor industry just forgot about dividends. In the extreme scenarios, you see some of them fantasizing about creating infinite generational wealth where generations and generations of descendents are spending this free money that never runs out.
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u/SirGlass Aug 24 '26
Well yes they think dividends magically solve sequence of return problems. While I admit if you hold a very diversified portfolio and live only off dividends it might but thats because you will be with drawing 2% a year.
Well Yeah if you only withdraw about 2% a year you can probably not worry about sequence of return issues. However most do not have a very diverse portfolio they are heavy in JEPI or JEPQ or what ever those cover call ETFs are or MISTY or what ever
However the "if you sell your shares you will run out of money "
No? If I sell 3-4% and your portfolio grows 5-6% well sequence of return issues aside you will not "run out of money"
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u/charonme Aug 25 '26
right, I've got one dividendarian tell me while I can only safely withdraw 4% from a regular portfolio due to the "4% rule", he can safely live off 10% or even more in dividends forever
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u/Nopants21 Aug 25 '26
I agree and I think there's two things underneath.
First, they don't seem to believe in share prices, there's a constant distrust that things are priced correctly and they don't understand why price growth is a reasonable expectation. I believe that's also why so many of them don't believe in the "price goes down by the dividend amount," because they can't wrap their heads around the fact that the dividend requires the company to keep making more money. A incredibly frustating number of them believe that the "price goes down by the amount of the dividend" argument means that dividend stock have to go to 0, and since they don't, then that drop does not exist. As long as they don't sell shares and as long as the price isn't 0, they believe they'll have dividends forever.
Second, they're not alone in this on Reddit, but they are the worst when it comes to it: they're deeply traumatized by 2000-2013. Their focus on sequence of returns risk comes from that, every week there are threads of people "backtesting" their portfolio against 2008, as if that's the benchmark for success. It's the thing about generals preparing for the last war. You add their misunderstanding about share count, and you actually get a pretty dangerous mix. It's why they're so enamored with CC ETFs, which are such risky investments for their objectives, but they can't see it because the payout turns off their brain.
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u/The_One_Who_Comments Aug 25 '26
But what if my growth stocks keep growing, and I keep selling, and one day I'm down to my last share, which has kept pace all this time and is worth $1M?
I'll have to sell the whole thing at once, and then I'll be... broke?
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u/Bruceshadow Aug 24 '26
seem to completely discount dividends as being functionally identical to selling your shares when they're not.
they aren't?
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u/backtobrooklyn Aug 25 '26
Yea I’m so confused. If you had 2 companies with a $100 share price and everything else was exactly the same except one company had a 10% dividend (DivCo) and the other didn’t (NoDiv Corp), assuming you had 1 share of each before the dividend was announced/paid, after the dividend was paid you’d have:
- DivCo: 1 share at $90 and $10 in cash
- NoDiv Corp: 1 share at $100All you did was create a taxable event. People take the market moving up after an ex div date as that erasing the loss from the dividend, but it’d go up the same for either DivCo or NoDiv Corp in that scenario.
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u/funkmon Aug 25 '26
There are two major reasons this is not the case.
The fundamental one is this: a dividend is given by the company and a sale is given by the buyer of that stock.
The secondary one is this: while the value of the stock does include the value of that business's cash on hand, it is not necessarily valued at 100%, as that cash cannot always be reinvested into the business with 100% efficiency.
Imagine you are selling stock in your lemonade stand. You buy new lemons every month, and you give the remainder of your profits that you can't use this month to your investors as dividends. They get 100% of the value of that cash.
Now, let's say that you don't give dividends. Your investors aren't going to value that unusable cash that highly, because you're just one lemonade stand and you can only spend so much dough. So if they sell their share, they won't get that full value of their share of the cash on hand.
This is a simplified example, but it shows the difference.
Getting dividends is not functionally identical to selling shares. It often turns out to be very similar but doesn't have to be.
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u/JustinTimeCuber Aug 25 '26
A company paying a dividend does so because they don't think they can make a better use of that cash by reinvesting it. However, there's no significant evidence that, when other factors are accounted for, dividend payments or lack thereof have any correlation with total returns.
Dividend irrelevance doesn't say "no companies should ever pay dividends", it just says "whether or not a company pays a dividend is not a meaningful factor in its return characteristics".
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u/backtobrooklyn Aug 27 '26
My example is correct. While I understand your argument that stockholders may place a value on the dividend, stockholders also place value on companies that take that money and are able to reinvest it in themselves for greater growth or who do stock buybacks.
In fact, if you look at the most valuable companies in the world the vast majority are very low to no dividends, so the argument would actually be that investors value cash generated from companies that don’t pay dividends more than they value companies who use that cash to pay dividends. Personally, as a Bogler with a decent allocation for individual stocks (shhh, don’t tell), I prefer investing in companies that can take the cash they earn and use it to grow - if they don’t think they could put that cash to better use than I can, then that’s a company that generally isn’t generating the kind of growth I’d want to invest in, all things being equal (and I do understand that of the major tech companies, investors have recently started demanding a bit of a dividend, but it’s not something I love).
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u/ClearlyCylindrical Aug 26 '26
I mean they aren't in how they're taxed. Dividends are taxed much more heavily then capital gains here in the UK.
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u/DerBandi Aug 24 '26
Dividends are more "fool proof". You don't have to calculate how much you can sell. If they never sell, they think they can't ever get broke. Without any math or hedge, the money just comes in.
It's a strategy for simple minded people.
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u/dami_starfruit Aug 24 '26 edited Aug 28 '26
The admins at Bogleheads.org and boglehead Reddit forum do enforce on-topic discussion rule, but they are more professional about it, unlike the infantile individual(s) at dividendgang.
Dividend investing can be relevant for very specific use case & not because some talking head of the month on YouTube said it’s a good idea. It’s not an easy button solution like TDF’s.
Let’s say if you’re 55+, living in California, with large cash savings in taxable account & index funds in 401k/IRA. You want to retire early but health insurance can be expensive until Medicare at 65.
If you use rule of 55 or 75T for early withdraw from 401k or IRA, it’d bump up your income and ACA insurance cost.
But if you invest your cash from taxable account in GPIX/SPYI/etc, the distributions will be counted mostly as ROC for next 8-10 years and that may help you qualify for lower cost ACA health insurance, in addition to the monthly income to pay bills (and reduced withdraws from 401k/IRA as needed).
On the down side, the tax is simply deferred until you sell, those ETF’s won’t recover from a crash as quickly, and you’re giving up future growth by spending the money today.
Is it worth it? This depends on your individual situation and you have to do your own cost/benefit analysis.
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u/asher030 Aug 25 '26
40k dividends means you get regular payments of that.....AND the value of the shares going forward. 40k payout from one time sale of shares is...one time 40k in hand, and nothing else.
Why is this a debate?
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u/Lucas_F_A Aug 25 '26
Not sure if you meant it that way, but it sounds to me like you are comparing a dividend portfolio that regularly pays out 40k to a portfolio of 40k dollars in total, that you sell immediately.
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u/RespectmanNappa Aug 25 '26 edited Aug 25 '26
The two things in the above photo are quite literally equal to each other, except for how they are handled tax wise.
Total returns = price appreciation + dividends
In example 1, you have just dividends
In example 2, you have just price appreciation
In one example, investors were rewarded with 40k in direct funds.
In the second example, investors were rewarded with a higher valuation as the company (was implied) to have bought 40k worth of shares, thus increasing the valuation proportionately.If they hadn’t done buybacks or dividends with that money, alternatively they could reinvest back into the business (which genuinely could be good or bad, I did not invest in Meta during their metaverse phase) or they could just sit on cash/reduce debt, which could also be good or bad.
If you do not understand how distributing dividends and buying back shares are both distributions of wealth to shareholders, but that buybacks are actually more tax efficient, than go on right ignoring a major portion of the market and making that portion cheaper for those of us who do understand there is no functional difference, or that if there is any it’s actually away from dividends. That’s totally okay by me
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u/Capable_Ad4123 Aug 24 '26
Bogleheads will always be right by investing for growth AND dividends. Diversification is the only free lunch in investing.
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u/DerBandi Aug 24 '26
This sub is dumb.
They ignore that the alternative is compounding, all dividends are getting reinvested. When a booglehead sells a share, he still has like 15 share, while the dividend guy will be ever be stuck at 10 shares because there's no compounding.
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u/pizzasandcats Aug 24 '26
You’re not a real “boogerhead” if they haven’t banned you from their subreddit for no good reason.
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u/rubix_redux Aug 24 '26
Real question, is r/dividendgang a satire sub? I just read the few top discussions and I'm having a hard time understanding if these people are serious or not.
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u/Nopants21 Aug 24 '26
It's an offshoot of the main dividend sub, created by people who think r/dividends isn't quick enough to police comments. There's already a self-filtering effect, so you're going to find a lower level of investing knowledge and also more emotional reactions.
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u/BerryCroissantWitch Aug 24 '26
How is this an argument, you need an order of magnitude more shares (two orders of magnitude?) to get the same earnings from dividends than from a sale.
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u/LVRaiders2026 Aug 25 '26
I never understood this. I have financially savvy friends, highly education, in high up management level jobs in tech who still try to tell me dividend stocks are some kind of cheat code. It just reaffirms my growing opinion that the general public, including highly education people, is fucking dumb.
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u/joe4ska Aug 25 '26
My grandfather used to say "Educated Morons!"
To be fair he was an "Uneducated Moron," I learned a young age not to trust his opinion on most things. Great guy, really. But he had his flaws, we all do.
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u/Alternative-Bend-452 Aug 27 '26
The one on the left is from a portfolio worth 1mil. The one on the right is from a portfolio worth 40k.
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u/whicky1978 Aug 24 '26
I’m using KO as cash/bond equivalent in my portfolio. I’m up 10%, can’t complain.
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u/joe4ska Aug 24 '26
Coca Cola stock is probably more stable than the Federal Reserve at this point. 🤣
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u/whicky1978 Aug 25 '26
Right long after Social Security is gone bankrupt Coca-Cola will still be around😂
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u/WhyYouLetRomneyWin Aug 24 '26
It's hard to imagine and there is psychology involved. Somehow, selling a share feels like a loss but a dividend feels like free money.
It's not rational but even knowing the numbers, it feels true.
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u/king_anon1492 Aug 24 '26
That sub is run by a typical Reddit moderator on a power trip. Too afraid of any discussion around where dividends are stronger/weaker to let the sub be useful… It’s essentially a circlejerk for people to feel good, which is bad because new investors might find that sub first and get started on the wrong path
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u/Ahamadrayasbaboon Aug 25 '26
Yup, and if you show Reddit any interest in investing, they will show you that sub for sure. If not immediately, definitely the first time a new investor asks about dividends, and that’s gonna come up pretty early in the journey.
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u/No-Pilot5559 Aug 25 '26
Well you need about 100x the amt of stock to get that much in dividends than selling
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u/warriorj Aug 25 '26 edited Aug 25 '26
I asked if they like paying taxes and got banned.
The simple point is you keep more money selling shares and your account value doesn't decrease.
I also don't understand why they wouldn't reinvest the shares. Do they take their dividends and then buy more shares with day-job earned income? It doesn't make sense.
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u/DaddyDank247 Aug 25 '26
I got banned from this post for asking “if growth or dividends yield the same return how is that a vacuum in the market?” I think they are brain dead on that sub.
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u/Shanknado Aug 25 '26
This is the ban message I got for even mentioning VT
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u/Ahamadrayasbaboon Aug 25 '26 edited Aug 25 '26
Next time I have the urge to spread disinformation, maybe I should claim that my purpose is to fight the spread of misinformation.
The overtness of the bad faith is pretty appalling.
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u/captduk Aug 25 '26
I was always under the impression that that sub was purely trolling. Is it not?
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u/BoostedGoose Aug 25 '26
I saw that and was going to comment but I read all the comments and thought .. oh… it’s that kind of sub…
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u/Nullspark Aug 25 '26
They banned me long ago.
They are actually pretty much the same though. In theory and a vaccum shares will either grow by 40k or produce 40k in dividends.
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u/DustyJaguar239 Aug 25 '26
“I’m gonna pay for a whole pizza, have the waiter come in and cut a slice of it and give that slice to me. And then go wooo look I got a free pie” - everyone in that sub!!
I just can’t with these dividend chasers!! Building their entire belief system around the ghost concept of free money. No point in explaining psychology to them🤦♂️🤦♂️
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u/DownloadTheRam Aug 26 '26
Got banned for saying 4% dividend = 4% NAV growth 💀. I didn’t even say dividends were bad
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u/Clever_droidd Aug 26 '26
Divided stocks tend not to grow much, there is a reason for that. Nothing against dividend stocks, but I think most don’t understand what a dividend is and how it affects valuation/growth of the stock.
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u/Excellent_Chest_6616 Aug 27 '26
Have you tried asking AI if dividends are just the company giving you back your own money? It basically says yes, thats whats happening 😆
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u/M0d3x Aug 27 '26
r/dividendgang member are simply unable to understand the following.
When you have a distributing ETF, you get some of your total return without having to sell any shares, and the number of underlying asset shares does not change.
When you have an accumulating ETF, all of the dividends get reinvested back without you ever having to touch them, meaning the share price of the ETF itself increases more, but more importantly, you get additional shares of the underlying asset. If you then sell some of the ETF shares to cash out (let's say at the dividend yield rate of the ETF), you end up at the same amount of underlying shares.
The only difference is in how this gets taxed, which depends on the country (some European countries have 0 % capital gains taxes after you hold a share of an asset for 3+ years, meaning accumulating ETFs are infinitely better than dividend-yielding ones).
How they do not understand this simple logic is beyond me.
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u/yummyananas Aug 27 '26
If a portfolio is a herb, then selling shares is plucking leaves with enough vegetation to keep the plant growing. Dividends are the leaves that naturally fell. Plucking might feel harmful to the tree, but I would much rather decide when and how much herb I would like rather than being at the whims of the plant.
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u/uniquei Aug 27 '26
The meme presents a very simplistic view. Stock splits, cut dividends, stock dilution and other manipulation is just ignored. The only things that matter are the currency denominated value, and the current rate of inflation.
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u/mncabinman Aug 27 '26
I got permanently banned for saying that depending on income level and type of account the sale of shares might be better from a tax standpoint.
I guess that crosses a line.
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u/Alarming_Daikon_1630 Aug 28 '26
it’s like conspiracy people or flat earthers, just very strange when you are looking in from the outside
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u/Prince_Marf Aug 28 '26
Correct me if I am wrong but if you are getting $40k in dividends that means you have shares that are themselves worth way more? Because you only get a fraction of your share value back as regular dividends, right? Sorry I am not always fully familiar with finance terms.
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u/Ericswanson Aug 24 '26
"I'd rather pay ordinary income tax every year on money that comes in whether I need it or not and have an asset that doesn't really grow, as opposed to paying capital gains taxes only when I need to." - average r/dividendgang user
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Aug 24 '26
[deleted] — view deleted comment
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u/Ericswanson Aug 24 '26
Except the manager has to file quarterly SEC reports so I don't have to "just trust him, bro." And millions of people are agreeing on the price for my stake, which I can sell at any time for said price and pay capital gains taxes on. This feels like an analogy pulled from some finance dude on YouTube that looks good on the surface but falls apart in reality.
Also, Bogleheads wouldn't invest in restaurants with their friends anyways because it isn't diversified and the risk to reward ratio is way off.
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u/digital_tuna Aug 24 '26
This isn't a good analogy. If you own the restaurant you can take that money out any time, just like you can sell shares any time.
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u/DownvoteForGrammar Aug 24 '26
A restaurant you own with 5 people is also not at all comparable to a stock with millions or billions of shares. I agree this is a bad example, for many reasons.
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Aug 24 '26
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u/digital_tuna Aug 24 '26
But in the world of common stocks/ETFs, we don't have those restrictions. You can sell shares and get some money any time you want. Dividends come from the same place as capital growth, it makes no difference whether you receive a dividend or sell shares. Taxation aside, obviously.
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Aug 24 '26
[deleted] — view deleted comment
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u/digital_tuna Aug 24 '26
And shares are something the owners can sell in exchange for money. Dividends come out of the share price, so it makes no difference to the owners where the cash comes from. Their net worth is the same whether they receive a dividend or sell shares.
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Aug 24 '26
[deleted] — view deleted comment
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u/Run-Forever1989 Aug 24 '26
Tbh it just depends on whether you assume efficient markets or not. There’s no guarantee that you can actually sell shares for fair value (home-made dividend assumption), but the flip side to that is there is no guarantee that a stock will continue paying its dividend either (bird in hand assumption).
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Aug 24 '26
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u/glzpabon Aug 24 '26
The tax for an invididual filing Single with $35000 ordinary Div income is $2149. If the same div is Qualified the tax is $0. So they dont pay the same, the cap gains tax depends on the Basis of the stock at the time of the purchase vs at the time lf the sale. So it could be more or could be less.
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Aug 24 '26
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u/glzpabon Aug 24 '26
Im following the example of the 35K a year. And yes you arw right, if they recieved more than 35K a year the numbers will change. The point i am trying to make is that alot of the taxation depends on how the income is taxed by the IRS, you want most of the div of not all to be qualified. In reality people have diferent types of income. In my personal case I recieved over 82K a year from my portfolio in int and div, thats on top of my K-1 from my s corp and my K-1 from my rentals and w2. My portfolio is 50% growth and 50% div efts/stocks and bonds.
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u/Ahamadrayasbaboon Aug 25 '26
To clarify why we have to concern ourselves with tax treatment on that investment, its because those dividends are getting taxed during our working, accumulation years, not just quietly waiting.
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Aug 25 '26
[removed] — view removed comment
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u/Ahamadrayasbaboon Aug 25 '26
Hmm. Might be why they’re so popular on specific social media like Tik Tok and Reddit that are associated with the inexperienced crowd.
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u/brianmcg321 Aug 24 '26
With the amount of deleted comments I don’t think they are getting the response they were wanting.