Category: Dividend Investing

Why Investing Solely For “Income” Is A Mistake

I don’t think you should ever invest for income. It is a mistake…….. You shouldn’t just invest for dividends, you should invest in businesses that reinvest their profits to achieve a future growth rate…..However, I realise that for many investors, the idea of realising part of their capital to provide income is anathema. – Terry Smith, CIO of Fundsmith. I’m

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The Scandinavian/Nordic Dividend Portfolio

Before you continue reading I  want to emphasize that the portfolio below is no recommendation to buy or sell the mentioned securities. I’m no investment advisor. Please do your own due diligence. (Several other portfolios are in the pipeline: The international dividend portfolio, the “skin in the game” portfolio and the “compounding” portfolio.) Below you find my picks for a

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How Much Can You Pay For A Quality Company And Still Make High Returns?

Introduction and summary: In an article a few weeks back I wrote an article about the logic behind buying shares in quality companies, given that they are trading at fair multiples. Warren Buffett and Charlie Munger are, not surprisingly, correct in saying that it’s far better to buy a wonderful company at a fair price than buying a fair company

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Don’t Be Fooled By Your Dividend Bias: DRIP/dividend Is Inferior To Internal Compounding

Introduction and summary: Many investors have a strong focus on dividends, so much that I would like to call it an irrational dividend bias. Dividend investors focus only on dividend stocks, and for the most part ignore those stocks which don’t pay a dividend. Thus, they leave out a huge segment of the market that has the potential of compounding

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Dividend Investing: Don’t Be Fooled By Your Dividend Bias – Marginal Rate Of Return/Incremental Return

This article covers these topics: Why dividend investing is not necessarily the most efficient way to compound capital. Dividends are paid out of book value, but usually reinvested above book value. Why accept to receive a dividend at book value when you can for example sell shares at two times book value? Where is the best place for your capital?

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Don’t Be Fooled By Your Dividend Bias – Sell Shares To Get “Income”

Introduction and summary: My idea with this article is to show that dividends are simply return of shareholders’ capital (a partial liquidation), exactly the same as selling the equivalent number of shares to create “income”. Admittedly, selling shares to support consumption feels a little like sawing off the branch I’m sitting on. Strangely enough, why doesn’t it feel the same about a

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