Comments on: Should I Become An Income Investor?

By: Dividend Tree

Dividend Tree — Thu, 08 May 2008 01:43:23 +0000

Dividend focused investing is one approach for long term capital growth. It is not a contradictory to growth. I have done some research and sharing few examples below.

Stock (year start, initial capital, end year, value of equity, annual cash flow)
JNJ (1975, $10, 2007, $1895, $45.23)
PFE (1982, $25, 2007, $872, $42.92)
BUD (1982, $25, 2007, 1414, $33.13)
GE (1975, $10, 2007, $6523, $197.98)
BAC (1975, $25, 2007, $1072, $56.14)
ING (1996, $50, 2007, $307, $6.19)
IIA (2003, $100, 2007, $288, $34.2)

A $10 investment in JNJ in 1975, gives cash flow of $45.23 and value of equity has become $1895. Considering some of later years, initial investment of $50 in ING in 1996, gives me $6.10 cash flow and value of equity is $307.

These are just few examples, which for sure show dividend based approach is one way for long term growth (and cash flow).

By: Anonymous

Anonymous — Thu, 08 May 2008 01:41:57 +0000

Dividend focused investing is one approach for long term capital growth. It is not a contradictory to growth. I have done some research and sharing few examples below.

A $10 investment in 1975, gives cash flow of $45.23 and value of equity has become $1895. Considering some of later years, initial investment of $50 in 1996, gives me $6.10 cash flow and value of equity is $307.

These are just few examples, which for sure show dividend based approach is one way for long term growth (and cash flow).

By: Dividend Growth Investor

Dividend Growth Investor — Sat, 03 May 2008 15:41:08 +0000

Thanks for the mention as well. I do not think that investing in dividend paying stocks detracts from your long-term performance. My research has definitely shown that certain dividend paying companies tend to outperform the S&P 500 over time:
http://dividendgrowth.blogspot.com/2008/02/why-do-i-like-dividend-aristocrats.html

Anyways, even if you invested in index funds, don’t forget that these also pay dividends as well. If you simply invested $1000 in VFINX in 1976, your investment would currently be producing over $600 in annual dividend income and would be worth over $30k.
My research also shows that it takes about 35 years on average for $1 invested in stocks(S&P 500) to begin producing $1 in dividend income.

http://dividendgrowth.blogspot.com/2008/04/back-test-results-of-one-rule-of-thumb.html

Sorry for posting the external links. But I don’t think that you are sacrificing your capital gains potential by looking at most dividend income stocks.

By: Dividends4Life

Dividends4Life — Fri, 02 May 2008 02:47:19 +0000

Thanks for the mention! I am greedy, I want the passive income and still beat my benchmark (S&P 500).

Best Wishes,
D4L

By: Investing & Passive Income

Investing & Passive Income — Thu, 01 May 2008 16:39:30 +0000

Thanks for the mention!

you’re right, blogging isn’t exactly passive, but it’s not a full-time job either.

By: JB

JB — Thu, 01 May 2008 12:38:39 +0000

Yeah – we would all become income investors if we had the capital! But I think it is something to strive for… breaking the $1,000 and $2,000 per month mark would be hard and takea time, but it’s do-able.

Also, wanted to thank you for this post because I’m a novice investor and didn’t quite know the difference between investing for income and investing for long-term. To me they sound very similar – but you pointed out a few subtleties.