Excess Returns Broken Models. Misleading Yields | Ryan Krueger on Avoiding the Dividend Trap
Jun 25, 2025
Ryan Krueger, co-founder of Freedom Day Solutions and manager of the MBOX ETF, joins the discussion to reveal the shortcomings of common dividend strategies. He emphasizes the importance of prioritizing dividend growth over high yield and critiques the flawed 4% withdrawal rule. Ryan introduces 'Freedom Day,' a novel approach to retirement focused on income rather than asset accumulation. The conversation explores the necessity of a disciplined sell process and the often-overlooked factors that can elevate long-term investment success.
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Dividend Growth Outperforms High Yield
- Dividend growth outperforms high yield over time due to compounding income growth.
- A 2% yield growing at 8% annually yields 5% on cost in 8 years, beating many static high yields.
Use Yield on Cost for Behavior
- Focus on dividend yield on cost to build investor confidence and encourage patience.
- High yield on cost helps investors hold through volatility due to growing income streams.
Seek Accelerating Dividend Growth
- Evaluate rate of change in revenue and dividend growth to find improving companies.
- Favor firms with accelerating dividend growth over slow growers to spot future winners.
