Experienced dividend investor Buck Hartzell & financial expert Matt Argersinger join to discuss the practical value of dividends, challenges & misconceptions, stock buybacks vs. dividends, spotlight on stock picks & strategies. Topics include the shift away from dividend investing, importance of reinvesting dividends, and exploring dividend stocks and strategies from insurance to technology companies.
Shift towards lower dividend yields due to factors like declining interest rates and business culture shifts.
Dividends act as a cushion for stock drops, aiding in wealth compounding; companies like Costco showcase hybrid dividend models.
Double taxation challenges, disciplined management via dividends, and investor preference for stability in dividend investing.
Deep dives
The Shift in Dividend Investing
Dividend yield in the S&P 500 hits a record low of 1.4%. Over the past 40 years, the trend of declining dividend yield is observed, contrasting with historical higher yields. Factors like declining interest rates and shifts in business culture contribute to this change.
The Practical Value of Dividends
Dividends offer a cushion for stock price drops, providing a steady income. Reinvesting dividends through DRIP plans allows for wealth compounding over time. Companies like Costco maintain a hybrid model with regular dividends and occasional special dividends.
Challenges and Misconceptions of Dividends
Double taxation is a significant challenge, where companies pay taxes on profits and shareholders pay taxes on dividends received. Misconceptions around dividend payments as a return of capital compared to buybacks are discussed, emphasizing the discipline dividends impose on management.
Stock Buybacks vs Dividends
Companies like Chevron and Walmart strategically commit to regular buybacks, aligning them with set budgets and objectives. Tactical buybacks at attractive prices exhibit a prudent approach. Dividend investor preferences lean towards dividends for their stability and long-term wealth compounding benefits.
Investing in High-Dividend Yield Companies
Consider investing in companies with high-dividend yields like RPM International, which has a strong track record of dividend growth and impressive sales performance.
Focus on Dividend Growth and Capital Allocation
Prioritize companies that focus on dividend growth as it often indicates strong earnings growth. Additionally, pay attention to how companies allocate their capital and the insider trading activity, as these factors can provide insights into the company's financial health and growth potential.
Did someone say free money?! After 4 years, we’re diving back into the world of dividend investing with David’s dividend friends Buck Hartzell & Matt Argersinger.
David breaks down dividends in chapters: Chapter 1: The Shift Away from Dividend Investing Chapter 2: Their Practical Value Chapter 3: Challenges & Misconceptions Chapter 4: Stock Buybacks vs. Dividends Chapter 5: Spotlight on Stock Picks & Strategies
Guests: Buck Hartzell, Matt Argersinger Stocks Mentioned: GOOG/GOOGL, BRK-B, EBAY , HSY, RPM, SBUX, EGHSF, BIP or BIPC, MTY
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