Stock broker doesn't like dividend stocks?

[The motor guy]

Am I the only one who thinks that's dumb? I've looked at probably 100 different stocks and the dividend stocks go up and down just like the ones that don't pay dividends. He likes the non dividend stocks cause they're more likely to grow. Now I'm not claiming to be an expert in this field, but imo you might as well make money while they're going up and down. Like this last month where my stocks dropped $23,000 Atleast I can say well I'm still getting paid dividends.

Opinions?

 

[Imp4]

Go to bogleheads.com and ask.
This is the wrong place.

 

[Mr Nice]

Vanguard and Fidelity has an ETF for people who like dividends.

Rising interest rates will definitely affect some interest sensitive sectors.... like REITs, utilities, telecom, etc....

 

[Warstud]

You should have a few in your porfolio. Those dividend stocks probably went up when all the others went down during this latest correction.

 

[ArrestMeRedZ]

I thought nobody listened to brokers any more about which stocks to buy. Doing so is a sure way to lock in below market yields.

 

[gfh77665]

Originally Posted by motor_oil_madman
Am I the only one who thinks that's dumb? I've looked at probably 100 different stocks and the dividend stocks go up and down just like the ones that don't pay dividends. He likes the non dividend stocks cause they're more likely to grow. Now I'm not claiming to be an expert in this field, but imo you might as well make money while they're going up and down. Like this last month where my stocks dropped $23,000 Atleast I can say well I'm still getting paid dividends.

Opinions?


He is right. You are young. Someone in your stage of life needs a high octane portfolio that will soar in the decades to come. Growth stocks fit the bill -- for you. As one gets older and there is less years to retirement, so dividend paying stocks are a better fit. Their Yield will provide some income for those who hold them. Keep your broker, he is a good one!

 

[HangFire]

Originally Posted by motor_oil_madman
Am I the only one who thinks that's dumb? I've looked at probably 100 different stocks and the dividend stocks go up and down just like the ones that don't pay dividends. He likes the non dividend stocks cause they're more likely to grow. Now I'm not claiming to be an expert in this field, but imo you might as well make money while they're going up and down. Like this last month where my stocks dropped $23,000 Atleast I can say well I'm still getting paid dividends.

Opinions?

Broker makes his money on your trades.

Only you make money when you hold a dividend stock.

So he wants you to trade.

 

[k1xv]

During periods of rising interest rates, stocks that pay a fixed dividend are subject to downward pricing pressure

Annual dividends divided by stock price = annual dividend yield.

As interest rates rise, investors demand that annual dividend yields go up as well. If the dividend is fixed, the only way that can happen is if the stock price drops.

 

[danez_yoda]

The danger of dividend stocks is of they company falls on hard times they can reduce orstop the dividend. GE is the latest to do this, Once the dividend get cut, the stock price falls as income investors (retiree accounts) leave in droves in search of an income stream. Big mutual funds and etfs do the same. There is risk in dividends as well.

You need a realistic target growth rate for your funds to reach your ultimate financial goal,

A 20 year old want to be a millionare at 40. Thats a goal. now you need a plan for contributions. Contributiion frequency. How much money you need liquid vs locked in. What rate of return you u need for the different portions of your portfolio to reach that goal. A spreadsheet (free office) can easily make these calculations and projections. Its 5th grade math.

For the stock portion of ny portfolio i like the index. The index beats 80% of all mutual funds performance one fees are taken into account, buying the indes puts me in the top 20 of mutual fund money managers. Thinking the funds will "shift gears" to minimize drops is folly. They dont. They have to remain in stocks during the entire down cycle. They cant raise a large %of cash.

For the income portion i have a few dividend stocks(the big names in the dow) to overweight the index,

For safe money look at theshrt end of todays yield curve, it is alomost flat so you dont need to lock in these rates for the long haul, Hold the cd or bond to maturity and there is little risk if fdic insured or high quality.

 

[UncleDave]

Originally Posted by HangFire
Originally Posted by motor_oil_madman
Am I the only one who thinks that's dumb? I've looked at probably 100 different stocks and the dividend stocks go up and down just like the ones that don't pay dividends. He likes the non dividend stocks cause they're more likely to grow. Now I'm not claiming to be an expert in this field, but imo you might as well make money while they're going up and down. Like this last month where my stocks dropped $23,000 Atleast I can say well I'm still getting paid dividends.

Opinions?

Broker makes his money on your trades.

Only you make money when you hold a dividend stock.

So he wants you to trade.



Bingo -

Broker makes a one shot only on a buy and hold vs continual churn.

UD

 

[The motor guy]

No he charges me two fees per month. A monthly management fee which I guess covers the cost of whatever trades he does and also a wealth management fee I believe it's called.

 

[Imp4]

Originally Posted by motor_oil_madman
No he charges me two fees per month. A monthly management fee which I guess covers the cost of whatever trades he does and also a wealth management fee I believe it's called.

You sir, are being taken to the cleaners.

 

[BMWTurboDzl]

Dividend stocks are for investors who have a huge amount of capital which at this moment you do not. Just remember market gains over the past 10 years are simply the result of monetary policy from the Federal Reserve so a black swan event is going to happen. 2-3 percent bump in the cost of credit and you will see a lot of companies struggle.

Lucky for you, you're young enough to recover.

 

[jhs914]

Take it from an old timer. Forget using a broker. Do a little research and determine how much his fees eat into your investment returns over the course of decades vs. investing in an index fund at Vanguard. For someone who is young and intends to invest long term you need to learn about dollar cost averaging. Pick a general index fund (S&P, one of the Russell indexes, etc) and invest a set amount every month or every payday. When stock prices fall your set amount buys more shares. When they rise your amount buys less. This complies with the first rule of investing: Buy low.

Fees for the large index funds are minuscule. Those 2 fees your broker charges you will eat a huge hole in your return over the course of years.

Also, as someone mentioned earlier, professional stock pickers (broker, money manager, whatever they want to call themselves) rarely, if ever, outperform the market as a whole over the long term. They may have a good year here or there but compared to a broad index fund over time they never come close the same return, especially when you factor in their brokerage fees.

And kudos to you for thinking ahead and investing in your future.

 

[UncleDave]

A good broker (which a minuscule number of us has 1% Id guess) can always beat market on a buy or sell and can create mini-runs on certain stocks using their credit lines and move the market either way enough to make a difference for you.

These kind of brokers are rare but if you have one feed them and they will make it worth your while.

Mine all retired and I just do it my self with a per trade fee now.


UD

 

[beanoil]

Originally Posted by Imp4
Originally Posted by motor_oil_madman
No he charges me two fees per month. A monthly management fee which I guess covers the cost of whatever trades he does and also a wealth management fee I believe it's called.

You sir, are being taken to the cleaners.

Ditto.

 

[MasterSolenoid]

Originally Posted by jhs914
Take it from an old timer. Forget using a broker. Do a little research and determine how much his fees eat into your investment returns over the course of decades vs. investing in an index fund at Vanguard. For someone who is young and intends to invest long term you need to learn about dollar cost averaging. Pick a general index fund (S&P, one of the Russell indexes, etc) and invest a set amount every month or every payday. When stock prices fall your set amount buys more shares. When they rise your amount buys less. This complies with the first rule of investing: Buy low.

Fees for the large index funds are minuscule. Those 2 fees your broker charges you will eat a huge hole in your return over the course of years.

Also, as someone mentioned earlier, professional stock pickers (broker, money manager, whatever they want to call themselves) rarely, if ever, outperform the market as a whole over the long term. They may have a good year here or there but compared to a broad index fund over time they never come close the same return, especially when you factor in their brokerage fees.

And kudos to you for thinking ahead and investing in your future.


And I will add:
A wise old timer.

 

[camryrolla]

Leave the dividend stocks for the old folks. The young ones need to worry about maxing out contribution to their 401k and IRA every year in their 20's and invest in low expense index fund that mimic the market.

 

[Kestas]

Originally Posted by MasterSolenoid
Originally Posted by jhs914
Take it from an old timer. Forget using a broker. Do a little research and determine how much his fees eat into your investment returns over the course of decades vs. investing in an index fund at Vanguard. For someone who is young and intends to invest long term you need to learn about dollar cost averaging. Pick a general index fund (S&P, one of the Russell indexes, etc) and invest a set amount every month or every payday. When stock prices fall your set amount buys more shares. When they rise your amount buys less. This complies with the first rule of investing: Buy low.

Fees for the large index funds are minuscule. Those 2 fees your broker charges you will eat a huge hole in your return over the course of years.

Also, as someone mentioned earlier, professional stock pickers (broker, money manager, whatever they want to call themselves) rarely, if ever, outperform the market as a whole over the long term. They may have a good year here or there but compared to a broad index fund over time they never come close the same return, especially when you factor in their brokerage fees.

And kudos to you for thinking ahead and investing in your future.


And I will add:
A wise old timer.

Good advice.

 

[Mr Nice]

My sister once mentioned to me she pays 1% to her financial adviser to 'manage' her money.

She is the typical Edward Jones, Raymond James, etc... type of client. I told her about ultra low cost Fidelity and Vanguard funds.... but that's as far as I'll go in terms of the advise I gave her.