An
article from Barrons with apologies for any paywall(s) encountered.
However, from the comments section there was this posted by a reader (not I):
"A quote from the article:
“It’s been a challenging market for dividend investing,” says one of those managers,"
Yes. It's very challenging to beat the no brainer bread & butter SP500 Index. Which way is better :
1) Buying a dividend paying fund & holding for the long run? or
2) Buying the no brainer bread & butter SP500 index & withdraw the % yield difference, & hold for the long run?
Lets mine the data:
Fund Yield ER YTD 1yr 2yr 3yr 5yr 10yr Delta
SPY 1.35 0.10 5.5 20.4 21.4 19.9 70.1 167
NOBL 1.79 0.35 1.7 3.7 5.6 7.5 40.4 118 -49%
LCEAX 2.09 0.82 3.4 2.7 -6.7 -18.3 -7.8 4.2 -163%
INUTX 2.76 1.05 3.6 5.8 -1.8 -6.4 -2.8 -11.8 -179%
VDIGX 1.69 0.30 1.0 4.4 4.1 4.0 30.9 73.2 -94
If you own any of the dividend funds you are not a happy investor after reading this post. Because you would would have done much better owning the no brainer bread & butter SP500 Index fund & had the capital appreciation cushion to pay yourself a much higher yield if wanted to."
Comments
From my current watch list, BBLU does the trick with a lower standard deviation and beta, and pays a buck 56 to boot. I'll bet a nickle there are others that beat on the dividend at least.
Personally, not into dividends per-se. As long as whatever I own goes up I’m happy.
Can’t help mentioning TRP’s PRFDX. When I began taking an active role in investing in the mid-90s it was considered possibly the best fund for everyday investors in Price’s much smaller stable. Brian Rogers, the manager in the 90s and beyond was a household name and was often a guest on Wall Street Week. Performance suffered for a few years after Rogers left. PRFDX’s younger brethren PRWCX took its place as perhaps the most touted TRP fund. (And David Gerioux became a household name.) But it looks like PRFDX has rebounded in recent years. And the +11.62% return going out 15 years is pretty impressive. Don’t own. Did for a while 25 years ago or so.
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There’s several stories this week touching on bonds and / or interest rates. I think that’s important to consider whether you own bonds or not. The manager of a GS muni bond fund (GSMIX) is interviewed. Found his take on credit interesting: ”The fund typically owns 15% in high-yield credit, but the portfolio weight can be as high as 30% in junk bonds if market conditions warrant … (Presently) high-yield comprises only 7% of holdings.” - Gosh, I’d like to hear more on what went into that call.
"INCOME. Dividend strategies vary. OEFs LCEYX, VDIGX focus on dividend-growth, and INUTX on higher current dividends. (In the ETF space, dividend-growth VIG, higher current-income VYM, dividend-blend SCHD)"
Good point! As @hank noted it's a very common occurrence in Barron's articles. Maybe I need to pay more for better insight.
The markets also changed since the 70s. Until that time, the best blue chip companies paid div as proof they had good business and healthy profits. The tech revolution changed all that. These new companies have been paying no to lower Div and invested their money in buying other companies and/or buybacks.
But, the income thing never stopped for decades while many who promoted it are selling their products and trying to convince you it's a superior method.
Remember, total returns include everything including all the distributions, and the only thing that counts, unless you care about risk which equals risk-adjusted returns.