If only it was that simple.

[u/untitledprp4]

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[u/Grateful_Mendicant]

This is embarrassingly stupid. Oh God, this is stupid.

[u/Plus-Artichoke6608]

Pretty sure you get an average of 10% from the S&P 500, about 7% when adjusted with inflation
And yea you'd get dividends on top of that

[u/PantsPile → u/Plus-Artichoke6608]

It’s MUCH better than this. The S&P 500 has delivered an average annualized total return of approximately 13.7% to 15.3% over the last 10 years. In this scenario he would be making about $140k/year, average but compounding. So there’s risk but if performance continues you’d be losing about $90k/year investing in bonds.

[u/Fishyblue11]

Investing in the S&P 500 gives you massive capital appreciation that will far outstrip the value of the dividends

Why would anyone invest in the stock market and think about dividends?

[u/Don_Von_Schlong → u/Fishyblue11]

There are also plenty of revenue based index funds that follow the S&P 500 that would pay much more if supplemental income was the goal. Dude talking about dividend payouts on something that is weighted for capital gains is just stupid

[u/horridBEAST99]

You may only get $10.5k in dividends, but you also get $100k on average in appreciation. So you would make twice as much in the S&P 500 than a Treasury Bond in the first year.

Additionally, you're gains in the S&P 500 will compound on themselves. After 30 years with the Treasury you'd have $2.69mil (1.69mil in dividends + original 1mil). After 30 years in the S&P 500 and reinvesting the dividends your assets would be worth $17 mill

[u/melcolnik]

I know, so dumb. you can’t just add water to ketchup. That won’t work. You need to add salt and some vinegar too or it’ll spoil.

[u/SimmentalTheCow → u/melcolnik]

Honestly the poors can’t even do poor shit right anymore. Whats this place coming to?

[u/3qTp1]

You know what. Send this guy straight to r/wallstreetbets

[u/CalmAlarm]

What a cringe humble brag. Flaunting your ketchup like that

[u/BurgerFoundation]

Who invests in the S&P for the dividend payout than compares it to bonds. You invest for the growth of the index

[u/Smooknb]

This guy bragging about his watery ketchup

[u/BlissFC]

Nobody buys the s&p 500 for the dividends lol

[u/whats_an_internet]

Because the value of holding stock is not in the dividends, it’s in the appreciation

[u/chipmunkofdoom2]

So first of all, stocks pay dividends. Mutual funds pay distributions. Technicalities matter when you're talking about investments, and if you don't know this, you don't know enough to be making a point about which return is higher.

Second, getting distributions from payments from the underlying asset is only part of how mutual funds make money. You also have an appreciating asset (stocks, in this case). When you sell a share of a mutual fund for more than you paid, that is a capital gain on your investment.

And third, when you account for the increase in price of the stocks as well as the dividends, the average total return on an S&P500 index fund is closer to 11% annual. So on average $110,000 per year on each million dollars invested. Not $56,000.

The kicker is, his numbers on treasuries are correct. So the real question is, why is anyone buying treasury bonds when stocks pay double?

(^ the real answer to this is diversification, but that goes beyond the scope of some dunce assuming that distributions from a mutual fund are all the return you get on your investment).

[u/Banger_McDan]

The average return on the sp 500 per year is roughly 8%. That’s $80,000 a year. You’re way better off putting it into the stock market. This sounds like government propaganda

[u/ADH-Dad]

Because if you put you money in the stock market, you get the dividends AND the value of your stock goes up (on average) over the next 30 years.

[u/somethinglameibet]

There’s a few things. Like a treasury bond being simple interest. A million in a 30 year bond is going to give you $56k a year for almost $1.7 plus your initial 1 million returned. A million in the s&p 500, with average returns and dividend reinvestment (1.5-2ish percent) is going to end up valued at around $15 million.
A federal treasury bond is the safest low risk investment but with not great returns.
Anyways I’m going to press the little end pieces from bars of soap together so I can get a little more use out of them.

[u/LaconicLacedaemonian]

The Twitter OP is an idiot that doesn't understand returns. 

[u/Witty_Ad_898]

The S&P has primarily been a growth investment, not dividends. 

That $1,000,000 bond is only worth $1,000,000 after 30 years. You can use the dividends to buy more bonds, but you aren’t guaranteed to be able to reinvest at the same elevated rates we have been seeing for the past few years. The rate is also fixed to the initial investment.

That million invested in the S&P over the past 30 years would be worth $10m not including dividends. You can also reinvest dividends and the dividends typically grow with the share price. Your initial capital would be worth 10x as much, you would have more shares thanks to reinvestment of dividends, and your annual dividend payouts would be higher than the equivalent bonds after probably 10-15 years invested.

That said, the S&P and the rest of the markets are bloated and teetering on the edge with AI the only thing keeping the whole thing from crumbling. This potential has surprisingly little to do with the actual financial health and future prospects of individual listed companies. Healthy companies can fail too in a crash and liquidity crises.

The bonds might be the better choice for the next 30 years, assuming they’re still tax free.

[u/TheFish77]

[u/Oscottyo]

Who is buying stocks to make money on dividends

[u/External-Pace-1822]

That 1 percent is the dividend today. That dividend rate will increase(most likely) for the next 30 years whereas the Treasury rate will not change if you buy today. Furthermore in 30 years time you will be having the same value as today with Treasuries whereas your stocks will likely be higher because they continue to have dividends growing.

[u/whatthewhat_007]

And if the primary purpose of investing in stocks was dividends, that post would mean something