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Dividends Win Today, They Won Yesterday, and They’ll Probably Win Tomorrow

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It’s been quite the run for dividend paying stocks as you can see in the performance of our Retirement Compounders, which sort of looks like bragging. Believe me I’m not.

Imagine for a moment you have a pile of cash. Where are you going to put it? Into the S&P 500? A passive index fund?

Not me.

Legendary investor Jack Bogle, and now Michael Burry, whose story was immortalized in The Big Short as one of the first investors to call the subprime mortgage crisis, have expressed their concerns.

“There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history,” wrote Bogle here, “The question we need to ask ourselves now is: What happens if it becomes too successful for its own good?”

“Trillions of dollars in assets globally are indexed to these stocks,” Burry said. “The theater keeps getting more crowded, but the exit door is the same as it always was. All this gets worse as you get into even less liquid equity and bond markets globally.”

Remember, returns you’re looking at today, especially the 10-year annual average, are going back to 2009—the beginning of the bull market.

Be selective with your stocks.

Your work should begin, and certainly not end, with the dividend.

Originally posted on Your Survival Guy. 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.

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