Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

3 Investing Pros Lay Out Their Dividend Strategies—and Stock Picks


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

  • Well. I didn't read the article, but it seems to me that all that is required is a fund that pays higher than a buck 35, and has out performed SPY over the typical M* periods. I'm too lazy to look up 24 month performance this Saturday morning.:).

    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.
  • edited May 4
    Glanced at Mark’s linked article. Didn’t take away much. But that’s Barron’s for you. Good at highlighting a number of different investment approaches and those who practice them to the point you get the sense you should buy one thing one week, sell it, and buy something else the next.

    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.
  • edited May 4
    PRFDX. TRP Equity-Income. I bought-in primarily because my stake in PRWCX by itself was getting so large. Yes, this camper is a happy one, re: PRFDX's performance. I've owned it for a year or two. Quarterly dividends, but they are not shooting the lights out. It's the overall performance that makes me smile. Up YTD +6.79% in '24. (May 4.) It's currently the leader in my portfolio. (13.88% of portf.) Of course, longer-term numbers tell a deeper story.
  • @hank - I concur, there really wasn't much useful content in the article. The comments almost always provide a better understanding/education.
  • edited May 5
    Mark said:

    @hank - I concur, there really wasn't much useful content in the article. The comments almost always provide a better understanding/education.

    Thanks for the heads-up @Mark. As a recent convert from the old Kindle format, I’m not yet fully accustomed to reading the actual magazine as it appears online. Miss the easier readability of Kindle, but it didn’t include readers’ comments. Agree the comments re dividend paying stocks are interesting. And those for other stories as well. Often the comments argue against the authored piece. And, in this case, readers offer additional investments to consider.
    -
    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.
  • edited May 5
    Think of Barron's article mentions of funds and/or stock as "for instance", but not comprehensive or the best or leading. In my take on this article (LINK), I noted the glaring omission of any ETFs.
    "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)"
  • Why has dividend-growth been challenging in this market for a fund such as VDIGX?
  • @YBB - who said "Think of Barron's article mentions of funds and/or stock as "for instance", but not comprehensive or the best or leading."

    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 income thing has been promoted for decades now. Two smart giants, Bogle and Buffett prefer the SP500, and rightly so.
    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.
Sign In or Register to comment.