PP vs Dividend Growth Investing

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Re: PP vs Dividend Growth Investing

Post by InsuranceGuy » Mon Feb 17, 2020 3:04 pm

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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 3:07 pm

it is easy to see what i am saying .

repeat after me , a total return is a total return regardless of how it is composed ... all get the same income draw potential and balance ..it can't be any different , except for taxes . when i take my 4% draw every january and i rebalance to raise spending cash , the money i draw couldn't care less how it is composed . all it cares about is that it is 4% of my portfolio value , realized or not , dividends or appreciation .

see how simple .
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Re: PP vs Dividend Growth Investing

Post by vnatale » Mon Feb 17, 2020 3:19 pm

Xan wrote:
Mon Feb 17, 2020 2:29 pm
Another difference in assumptions may be that I assume all companies will eventually wind down and stop operating. And in the housing example, I assumed the house fell over after 50 years. If you follow my example down to the end, then the company winds down and distributes everything that's left as a dividend.

Vinny, do you agree that if the value of the shares eventually goes to zero, that my assertions end up being true?

So maybe what Mathjak and InsuranceGuy are saying is true, that everybody will be a winner without dividends, as long as it's true that the company keeps going, and growing, forever without limits. And that what I say is true if the company will eventually stop operating.

I suppose it's up to the reader to decide which scenario is more likely.
I'm trying to answer the question.

If the company eventually goes worthless after your 1950 analysis then A would have realized a $50,000 gain while B&C would have realized a collective $100,000 loss, for a net loss of $50,000, which is what you have been saying all along.

Then I have to agree with all you have stated above.

However, I don't think anyone ever makes an investment in any company with the expectation that the company will eventually stop operating, do they?

Or, maybe they do in my earlier example wherein the Venture Capitalists know that a certain % of their company investments will go to zero. But they don't assume that will happen to any specific company and assume that overall they will be a net winner.

Vinny
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Re: PP vs Dividend Growth Investing

Post by Xan » Mon Feb 17, 2020 3:23 pm

vnatale wrote:
Mon Feb 17, 2020 3:19 pm
Xan wrote:
Mon Feb 17, 2020 2:29 pm
Another difference in assumptions may be that I assume all companies will eventually wind down and stop operating. And in the housing example, I assumed the house fell over after 50 years. If you follow my example down to the end, then the company winds down and distributes everything that's left as a dividend.

Vinny, do you agree that if the value of the shares eventually goes to zero, that my assertions end up being true?

So maybe what Mathjak and InsuranceGuy are saying is true, that everybody will be a winner without dividends, as long as it's true that the company keeps going, and growing, forever without limits. And that what I say is true if the company will eventually stop operating.

I suppose it's up to the reader to decide which scenario is more likely.
I'm trying to answer the question.

If the company eventually goes worthless after your 1950 analysis then A would have realized a $50,000 gain while B&C would have realized a collective $100,000 loss, for a net loss of $50,000, which is what you have been saying all along.

Then I have to agree with all you have stated above.

However, I don't think anyone ever makes an investment in any company with the expectation that the company will eventually stop operating, do they?

Or, maybe they do in my earlier example wherein the Venture Capitalists know that a certain % of their company investments will go to zero. But they don't assume that will happen to any specific company and assume that overall they will be a net winner.

Vinny
Well remember, for every seller there is a buyer. SOMEBODY is riding the stock all the way down. It doesn't matter whether it's B+C or people who are 100 transactions removed: overall, investors are only ahead by the dividend.
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Re: PP vs Dividend Growth Investing

Post by vnatale » Mon Feb 17, 2020 3:31 pm

Xan wrote:
Mon Feb 17, 2020 3:23 pm
vnatale wrote:
Mon Feb 17, 2020 3:19 pm
Xan wrote:
Mon Feb 17, 2020 2:29 pm
Another difference in assumptions may be that I assume all companies will eventually wind down and stop operating. And in the housing example, I assumed the house fell over after 50 years. If you follow my example down to the end, then the company winds down and distributes everything that's left as a dividend.

Vinny, do you agree that if the value of the shares eventually goes to zero, that my assertions end up being true?

So maybe what Mathjak and InsuranceGuy are saying is true, that everybody will be a winner without dividends, as long as it's true that the company keeps going, and growing, forever without limits. And that what I say is true if the company will eventually stop operating.

I suppose it's up to the reader to decide which scenario is more likely.
I'm trying to answer the question.

If the company eventually goes worthless after your 1950 analysis then A would have realized a $50,000 gain while B&C would have realized a collective $100,000 loss, for a net loss of $50,000, which is what you have been saying all along.

Then I have to agree with all you have stated above.

However, I don't think anyone ever makes an investment in any company with the expectation that the company will eventually stop operating, do they?

Or, maybe they do in my earlier example wherein the Venture Capitalists know that a certain % of their company investments will go to zero. But they don't assume that will happen to any specific company and assume that overall they will be a net winner.

Vinny
Well remember, for every seller there is a buyer. SOMEBODY is riding the stock all the way down. It doesn't matter whether it's B+C or people who are 100 transactions removed: overall, investors are only ahead by the dividend.
Again, in the limited scenario you present, I think I'd agree. If a stock does go down to zero then the loss of all its value is going to be collectively shared by those who each bought and sold at a loss.

And, if there had no dividends, would there then have been less of a loss to be shared?

In your scenario where the investments eventually goes to ZERO could we not then analogize it to a Bernie Madoff situation wherein those who got the dividends were similar to those who got paid interest under the Ponzi scheme while there were still incoming funds to pay that interest? That they did get paid their interest increased the loss that others eventually incurred.


Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: PP vs Dividend Growth Investing

Post by Smith1776 » Mon Feb 17, 2020 3:35 pm

This thread is honestly just becoming bizarre, circular, and for the most part, pointless. :o :o
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 4:16 pm

I agree ,around and around we go ...but it really is such a simple concept because total return is always the entire story no matter what .

But like everything in life , once you start to imagine all kinds of scenarios to throw in to the mix it just becomes not based on math and the facts but on all kinds of personal assumptions that don’t change things but make following the money trail more difficult to see .

It reminds me of a corrupt money trail where it takes all different transformations and you lose sight of the basics .

I think everyone gets the idea and can decide for themselves which camp they are in And what it means for their own personal plan
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Re: PP vs Dividend Growth Investing

Post by Xan » Mon Feb 17, 2020 4:24 pm

Agreed, I think we're finished here.

It seems to boil down to:
* Do you assume that a company's stock will keep increasing forever, or will the company eventually stop operating
* Do you care more about realized gains or paper gains
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 4:27 pm

Keyword is care about realized vs unrealized ....not caring at a particular time is very different from the usual myth you hear of it is only on paper so it does not count

It always represents your net worth and value .whether you have reason to care at that moment is a whole other thing ..

That retirement success rate as well as draw does not care realized or not ...just take the snap shot ,it all counts

So finally we agree on that point
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Re: PP vs Dividend Growth Investing

Post by Smith1776 » Mon Feb 17, 2020 4:36 pm

So, who here likes pizza?
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 4:44 pm

We got great ny pizza ..........
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 4:47 pm

Xan wrote:
Mon Feb 17, 2020 4:24 pm
Agreed, I think we're finished here.

It seems to boil down to:
* Do you assume that a company's stock will keep increasing forever, or will the company eventually stop operating
* Do you care more about realized gains or paper gains
It was a long but good debate ...it certainly made people daring to read, and follow along to think about things ,which is what a good discussion should do ....

Sleeping with the enemy is the best way to learn ......
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Re: PP vs Dividend Growth Investing

Post by Smith1776 » Mon Feb 17, 2020 4:50 pm

mathjak107 wrote:
Mon Feb 17, 2020 4:44 pm
We got great ny pizza ..........
I personally am very partial to pineapple on pizza, despite how reviled it frequently is.

Almost all pizza toppings are savoury. That's a risk that can be diversified away. Adding a sweet topping like pineapple provides a diversification benefit to the overall flavour "portfolio."

Anyway, good debate guys. At the very least it keeps this forum lively and active, and we all learn as Mathjak mentioned.
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Re: PP vs Dividend Growth Investing

Post by Kriegsspiel » Mon Feb 17, 2020 5:41 pm

Smith1776 wrote:
Mon Feb 17, 2020 4:50 pm
mathjak107 wrote:
Mon Feb 17, 2020 4:44 pm
We got great ny pizza ..........
I personally am very partial to pineapple on pizza, despite how reviled it frequently is.

Almost all pizza toppings are savoury. That's a risk that can be diversified away. Adding a sweet topping like pineapple provides a diversification benefit to the overall flavour "portfolio."

Anyway, good debate guys. At the very least it keeps this forum lively and active, and we all learn as Mathjak mentioned.
When I was in HS, after sports practice we would sometimes go to CiCis pizza buffet. Their desert pizza was fantastic. It was more of a strudel, though. Haven't been to one since then, I wonder if they're still around.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Mon Feb 17, 2020 6:22 pm

Smith1776 wrote:
Mon Feb 17, 2020 4:50 pm
mathjak107 wrote:
Mon Feb 17, 2020 4:44 pm
We got great ny pizza ..........
I personally am very partial to pineapple on pizza, despite how reviled it frequently is.

Almost all pizza toppings are savoury. That's a risk that can be diversified away. Adding a sweet topping like pineapple provides a diversification benefit to the overall flavour "portfolio."

Anyway, good debate guys. At the very least it keeps this forum lively and active, and we all learn as Mathjak mentioned.
We have a local pizza place in queens that does French toast pizza ,it is insane
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Re: PP vs Dividend Growth Investing

Post by Xan » Mon Feb 17, 2020 7:54 pm

Kriegsspiel wrote:
Mon Feb 17, 2020 5:41 pm
Smith1776 wrote:
Mon Feb 17, 2020 4:50 pm
mathjak107 wrote:
Mon Feb 17, 2020 4:44 pm
We got great ny pizza ..........
I personally am very partial to pineapple on pizza, despite how reviled it frequently is.

Almost all pizza toppings are savoury. That's a risk that can be diversified away. Adding a sweet topping like pineapple provides a diversification benefit to the overall flavour "portfolio."

Anyway, good debate guys. At the very least it keeps this forum lively and active, and we all learn as Mathjak mentioned.
When I was in HS, after sports practice we would sometimes go to CiCis pizza buffet. Their desert pizza was fantastic. It was more of a strudel, though. Haven't been to one since then, I wonder if they're still around.
Was that the all you can eat for $2.99 place? There's one of those near Schlitterbahn. We used to DEMOLISH it after a day at the water park. I don't know how they stayed in business (and probably don't want to).
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Re: PP vs Dividend Growth Investing

Post by boglerdude » Mon Feb 17, 2020 10:19 pm

Xan you said buybacks are a form of dividend, so instead of using the term "dividend" use net profits or total return. Dividend is special case of forced quarterly cash distribution, sometimes even when profits are declining.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:41 am

boglerdude wrote:
Mon Feb 17, 2020 10:19 pm
Xan you said buybacks are a form of dividend, so instead of using the term "dividend" use net profits or total return. Dividend is special case of forced quarterly cash distribution, sometimes even when profits are declining.
one of the confusing parts to the whole thing is people use the wrong words at times .. dividends are never just a distribution of profits . they are a distribution -period even when money is being lost ...

once companies pay dividends and hit a rough spot it can be the kiss of death suspending them . so it just compounds the downward spiral .

a company sliding down and paying out has the damage compounded . if markets take the stock down 5% and that dividend is 5% that is a 10% drop in share price .

so dividends are not a distribution of profits . they are merely a forced withdrawal of your already invested dollars .those profits if any are reflected in the share price already pre ex div .. what dividends represent and how they work are one of the misunderstood topics in investing because people look at it like interest . interest goes on top of your balance , dividends are a withdrawal off your balance ...

so all profits must be represented in that share price pre ex div because there is nothing else to give you ..your total return is the share price plus distributions which were subtracted off the share price . that is identical to a total return on a portfolio which is the portfolio value plus all distributions off the portfolio .

no difference except taxes .

so people confuse themselves by the words dividends are a paying of profits , because there does don't have to be any profits at all that year or years . , plus they don't understand that there is a subtraction of equal dollars off their invested balance represented by number of shares x share price . .

how may times do you hear i don't care what the stock is doing because i am getting paid a healthy dividend .. well all that means is you are taking a bigger withdrawal in a down market and the dollars compounding in the recovery will be that much less .

it really is hard to understand the fact that reinvesting dividends in a down market has no advantage either . that is because of the fact they hand you money off your balance , call it 100k ... they pay you 10% so you have 90k invested 10k to reinvest . the price per share falls the same 10% ... so your 10k being put back in gives you back the same 100k again for compounding. actually less because before you can put those dollars back they are taxed in a taxable brokerage account . how many shares make it up is irrelevant . all compounding is on total dollars invested .

so this is why there are and always will be discussions about dividends , simply because they are just not understood even by the most experienced investors .

whether the dividend payers do better or worse is a whole other topic and has nothing to do with the mechanics of that withdrawal
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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 7:16 am

🍕 soppressata!

Xan, I don’t know if you saw my Q back on page 7. When you get a chance?
dualstow wrote:
Sat Feb 15, 2020 3:00 pm
Xan, I am curious. On page 1 you wrote -
Xan wrote:
Fri Feb 14, 2020 9:03 am
Dividends keep a company's collective mind and priorities on the right thing: making money for stockholders. It's easy for a company that doesn't pay dividends to get wrapped up it itself. Dividends keep a company humble. Dividend companies remember the whole point of being in business: to make money.

My opinion, anyway. My stock allocation is a broad market index that includes many dividend and non-dividend companies, so I'm shielded against being wrong!
Your first paragraph made me think you're more into dividends than I am, and I have a bunch of dividend growing indy stocks in a pre-pp vp.
Your second paragraph, then, made me wonder: if that's how you feel, why are you not invested in dividend stocks?
It is it a matter of not having any variable portfolio?
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:19 pm

Perfect example about what i said above about companies paying out despite huge losses for investors ..khc has now fallen almost 80% from its highs ...its debt was reduced to junk a few days ago ...but the dividend still gets paid ..not only does a dividend get paid but they are not even cutting it .

Kraft Heinz on Friday saw not one, but two ratings agencies downgrade the company’s debt — meaning it had lost its coveted investment grade status. Both Fitch Ratings and S&P Global Ratings trimmed their assessments.

As of Dec. 28, the company’s total debt outstanding was $29.2 billion, the Fitch report noted.

So repeat after me —— never confuse a dividend payment with anything but a withdrawal off your balance ..it is not a distribution of gains or profits .getting a withdrawal from an investment does not mean you made a dime on the investment.

Berkshire lost 4.3 billion in one day .

https://www.cnbc.com/2019/02/22/warren- ... lunge.html


https://www.post-gazette.com/business/m ... 2002170090
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 3:52 pm

On the other hand bed bath and beyond announced they are using 1 billion dollars to buy back stock , upgrade stores and the supply chain and pay down debt ...bed bath and beyond lost 30% the last 12 months ....
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Re: PP vs Dividend Growth Investing

Post by Xan » Tue Feb 18, 2020 3:53 pm

dualstow wrote:
Tue Feb 18, 2020 7:16 am
🍕 soppressata!

Xan, I don’t know if you saw my Q back on page 7. When you get a chance?
dualstow wrote:
Sat Feb 15, 2020 3:00 pm
Xan, I am curious. On page 1 you wrote -
Xan wrote:
Fri Feb 14, 2020 9:03 am
Dividends keep a company's collective mind and priorities on the right thing: making money for stockholders. It's easy for a company that doesn't pay dividends to get wrapped up it itself. Dividends keep a company humble. Dividend companies remember the whole point of being in business: to make money.

My opinion, anyway. My stock allocation is a broad market index that includes many dividend and non-dividend companies, so I'm shielded against being wrong!
Your first paragraph made me think you're more into dividends than I am, and I have a bunch of dividend growing indy stocks in a pre-pp vp.
Your second paragraph, then, made me wonder: if that's how you feel, why are you not invested in dividend stocks?
It is it a matter of not having any variable portfolio?
Sorry, dualstow, missed it.

I hadn't really thought very much about a preference for dividend stocks before. It's still fairly weakly-held. Mostly I really don't want to spend any time picking stocks. Too busy with an actual job, kids, and arguing here. :-)
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Tue Feb 18, 2020 4:08 pm

Headed to see the eagles tonight at Madison square garden ...a Christmas gift from all our kids ....

So no more posts Ha ha
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Re: PP vs Dividend Growth Investing

Post by dualstow » Tue Feb 18, 2020 4:09 pm

Xan wrote:
Tue Feb 18, 2020 3:53 pm
I hadn't really thought very much about a preference for dividend stocks before. It's still fairly weakly-held. Mostly I really don't want to spend any time picking stocks. Too busy with an actual job, kids, and arguing here. :-)
😂
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Re: PP vs Dividend Growth Investing

Post by Xan » Tue Feb 18, 2020 4:25 pm

mathjak107 wrote:
Tue Feb 18, 2020 4:08 pm
Headed to see the eagles tonight at Madison square garden ...a Christmas gift from all our kids ....

So no more posts Ha ha
The Eagles didn't even make the playoffs this year!
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