Where are the dividends with Funds??

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riptide
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Where are the dividends with Funds??

Post by riptide » Mon May 04, 2015 6:21 pm

I switched over from individual blue chip stock companies (about 6 of them). I used to really enjoy the quarterly dividends from the likes of At&t , Norfolk Southern , and Dominion Resources. Where are the dividends with the wonderful Index funds I now hold? I have seen small dividends from VTSAX total Index, and virtually nothing from VTIAX International, and nothing from VSIAX small cap. The only one that pays dividends regularly is the Total bond fund VBTLX. So what is up?
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Re: Where are the dividends with Funds??

Post by dm200 » Mon May 04, 2015 6:34 pm

Many stocks held in many index funds (because that is the index) pay low or very low dividends, especially compared to several of the stocks you cite.

Although Vanguard Index funds have a low (or very low) expense ratio, nonetheless it is not zero. Dividends on holding of a fund first offset fund expenses before dividend distributions.

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Re: Where are the dividends with Funds??

Post by Sailor36 » Mon May 04, 2015 7:33 pm

Perhaps the reason you are seeing lower dividends than you expect from your stock index funds is that funds do not necessarily pay out pay their dividends in equal quarterly installments the way the underlying stocks do. For example, the last several distributions from VTIAX have been

Date NAV LTCG STCG ROC Dividend Total
03/24/2015 27.54 0.0000 0.0000 0.0000 0.0840 0.0840
12/19/2014 26.11 0.0000 0.0000 0.0000 0.2150 0.2150
09/23/2014 27.84 0.0000 0.0000 0.0000 0.1470 0.1470
06/23/2014 29.10 0.0000 0.0000 0.0000 0.3250 0.3250
03/24/2014 27.19 0.0000 0.0000 0.0000 0.1980 0.1980

This data is at the bottom of the Morningstar Quote page for the fund.

The dividends are shown in dollars per share. As you can see the distributions vary considerably from quarter to quarter and the year-end distribution is generally highest. Some funds only distribute at the end of the year.

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Fund Dividends

Post by EyeDee » Mon May 04, 2015 8:53 pm

.
Although Total Bond Market Index Fund (VBTLX) pays dividends monthly, Total Stock (U.S.) Market Index Fund and Total International Stock Market Index Fund pay dividends quarterly. Small-Cap Value Index (VSIAX) normally paid dividends yearly in the past, but I believe it is one of the funds changing to quarterly dividend this fall.
Randy

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Re: Where are the dividends with Funds??

Post by z3r0c00l » Mon May 04, 2015 9:18 pm

VTSAX pays almost as much in dividends as VBTLX. Lots of companies are going to be paying more in dividends (notably Apple, a significant chunk of this fund) and so they may increase some in the future. But the name of the game with stocks is increase in share price not dividends. This is a tax issue among other things. Many of us would prefer higher dividends but we could just be old fashioned in that way. This is one reason why I really like the REIT concept; companies should primarily seek stable income rather than meteoric and risky growth, and they should return most of this income to shareholders imho. But we don't live in that world right now. Still, considering how few stocks pay any dividend at all, getting 1.5% or 2% a year is pretty good. Keep an eye on total return. A really good year in stock prices can outperform a decade of dividends.

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Re: Where are the dividends with Funds??

Post by DSInvestor » Mon May 04, 2015 9:33 pm

Here are some links that show historical returns broken out into capital return, income return and total return:

Total Stock Market Index Admiral:
https://personal.vanguard.com/us/funds/ ... INT#tab=1a

Total International Stock Market Index Admiral
https://personal.vanguard.com/us/funds/ ... INT#tab=1a

Total Bond Market Index Admiral:
https://personal.vanguard.com/us/funds/ ... INT#tab=1a

If you wanted to see the most recent distributions for each fund, click on the distributions tab on the fund's page.
Wiki

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Re: Where are the dividends with Funds??

Post by toto238 » Mon May 04, 2015 10:19 pm

Bear in mind many companies now use stock buybacks instead of or in addition to dividends. The net effect is identical, it's just another way to return cash to shareholders. Honestly, especially in a taxable account, I would like it if all companies did 100% stock buybacks and zero dividends. I wouldn't have to worry about yearly taxes and tax rate tops out at 20% for LTCG. What's more is 100% of my investment would be LTCG, as no dividends were reinvested during the last 12 months.

Why do you want dividends? Seems foolish to me. I hate dividends. It's the most tax inefficient way to give money to shareholders.

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Re: Where are the dividends with Funds??

Post by z3r0c00l » Tue May 05, 2015 5:53 am

toto238 wrote:
Why do you want dividends? Seems foolish to me. I hate dividends. It's the most tax inefficient way to give money to shareholders.
Because any increase in share price is potentially, even likely to be temporary over the course of decades. Kodak is a great example of this. Anyone who didn't take dividends out, or who reinvested them, would be left with zero despite decades of good profits from this company. Share price is speculation on future earnings and stability. Doesn't matter if your Google stock goes from 100 to 1,000 if eventually it goes back to 100 or even down to zero which is common for MOST stocks eventually. The purpose of owning stock is to share in profits of a company, or it should be. Not to make speculative bets on the value of the stock which not only incorporates cash on hand but also projected future profits and industry trends and plenty of investor sociology. Apple is paying pretty small dividends but they could afford to return tens of billions to investors directly. Buybacks, part of their plan, will surely help improve share price initially. One would have to sell some stock, rebalance essentially, to lock those gains in. Don't presume any company, not the least Apple, will last forever.

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Re: Where are the dividends with Funds??

Post by Aptenodytes » Tue May 05, 2015 6:20 am

z3r0c00l wrote:
toto238 wrote:
Why do you want dividends? Seems foolish to me. I hate dividends. It's the most tax inefficient way to give money to shareholders.
Because any increase in share price is potentially, even likely to be temporary over the course of decades. Kodak is a great example of this. Anyone who didn't take dividends out, or who reinvested them, would be left with zero despite decades of good profits from this company. Share price is speculation on future earnings and stability. Doesn't matter if your Google stock goes from 100 to 1,000 if eventually it goes back to 100 or even down to zero which is common for MOST stocks eventually. The purpose of owning stock is to share in profits of a company, or it should be. Not to make speculative bets on the value of the stock which not only incorporates cash on hand but also projected future profits and industry trends and plenty of investor sociology. Apple is paying pretty small dividends but they could afford to return tens of billions to investors directly. Buybacks, part of their plan, will surely help improve share price initially. One would have to sell some stock, rebalance essentially, to lock those gains in. Don't presume any company, not the least Apple, will last forever.
1) if you invest in the total market a single company, or even a bunch of them, going bankrupt is not a bad thing. It is a good thing, because it helps improve the overall market. Whether Apple lasts forever doesn't matter for total-market investors.
2) In 2013, the year Kodak went bankrupt, investors in Vanguard's Total Stock Market earned a return of 33%.
3) thinking that share prices are irrelevant for the long-term investor is a highly idiosyncratic view, not shared by many people here I don't think.
4) For an individual investor, the purpose of owning stock is to make money, not share in profits. If the company becomes more valuable and therefore share prices rise, investors want to make money off of that.
5) "locking-in" gains is an exercise in mental accounting that is considered counter-productive by many people.

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Re: Where are the dividends with Funds??

Post by nisiprius » Tue May 05, 2015 6:34 am

riptide wrote:I switched over from individual blue chip stock companies (about 6 of them). I used to really enjoy the quarterly dividends from the likes of At&t , Norfolk Southern , and Dominion Resources. Where are the dividends with the wonderful Index funds I now hold? I have seen small dividends from VTSAX total Index, and virtually nothing from VTIAX International, and nothing from VSIAX small cap. The only one that pays dividends regularly is the Total bond fund VBTLX. So what is up?
For one thing, they are irregular.

For another thing, the total return of stocks comes from two sources: dividends and capital appreciation. The general idea is that a company can either pay dividends to shareholders and grow slowly, or retain dividends, use them to fund capital expansion, and grow quickly. Although it is always a topic of controversy, to a good rough approximation it doesn't make any difference in total return which they do, and dividend stocks are not any better than the rest. They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.

If you want those dividends, the obvious choice is to use a mutual fund that focusses on dividend-paying stocks and Vanguard has several. I know little about dividend stock investing because I don't believe in it myself and don't do it, but two obvious possibilities are:

Vanguard High Dividend Yield Index Fund Investor Shares (VHDYX and friends) (an index fund)
Vanguard Equity Income Fund Investor Shares (VEIPX) (active)

I don't think there's any harm at all in using a dividend-focussed fund if you want to use dividends payments as your "sustainable withdrawal strategy," as long as you don't kid yourself that there's much difference between doing that and just selling small amounts of Total Stock.

The "distributions" page for the funds mentioned is showing an "SEC yield" of 1.76% for Total Stock, 3.06% for High Dividend Yield, 2.76% for Equity Income Fund... I'm too lazy to check further than that but I think it means yes, the dividend funds really do pay out more than the total stock fund. At the almost precisely compensating cost of growing less in value per share.

One of the weird things to me about the cult of dividend stocks is that most of the claims made for dividend stocks... for example, that you can relax and ignore the drops in market value because the dollar value of stream of dividends is relatively steady... actually apply much more strongly, much more precisely, and much more dependably to bonds. On the face of it, it's not clear what the big advantage of shifting to slightly-bond-like stocks is, as opposed to simply increasing bond allocation.

(You have seen this yourself in your observation that your bond fund pays steady, regular dividends. You tune your portfolio to your taste. Your total bond holding imparts a vaguely dividend-stock-like behavior to your portfolio as a whole).

Yet dividend stocks have a cult following while it's currently popular to diss bonds. One of the things rarely mentioned about dividend stocks is that to the extent they are valued for their steady stream of dividend payments, to precisely that extent they are subject to interest rate sensitivity, just like bonds.
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Re: Where are the dividends with Funds??

Post by riptide » Tue May 05, 2015 7:32 am

They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.

Thank you Nisiprius for all the information. This is exactly why I like dividends. My family got used to living off the dividends quarterly before with the blue chip stocks. They were a great help to my annual income, and very useful. Now, the dividends are sporadic , not quarterly like I am used to. Thank you all for the list of dividend payouts, I will go look that up as well.

The bond fund is most like what I am used to paying regular dividends and I like that. Things change, and this is just another change for me coming from the blue chip dividend paying stocks to index funds. I don't like everything about it. :o
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Re: Where are the dividends with Funds??

Post by YDNAL » Tue May 05, 2015 8:36 am

nisiprius » Tue May 05, 2015 6:34 am wrote:If you want those dividends, the obvious choice is to use a mutual fund that focusses on dividend-paying stocks and Vanguard has several. I know little about dividend stock investing because I don't believe in it myself and don't do it, but two obvious possibilities are:

Vanguard High Dividend Yield Index Fund Investor Shares (VHDYX and friends) (an index fund)
Vanguard Equity Income Fund Investor Shares (VEIPX) (active)

I don't think there's any harm at all in using a dividend-focussed fund if you want to use dividends payments as your "sustainable withdrawal strategy," as long as you don't kid yourself that there's much difference between doing that and just selling small amounts of Total Stock.

The "distributions" page for the funds mentioned is showing an "SEC yield" of 1.76% for Total Stock, 3.06% for High Dividend Yield, 2.76% for Equity Income Fund... I'm too lazy to check further than that but I think it means yes, the dividend funds really do pay out more than the total stock fund. At the almost precisely compensating cost of growing less in value per share.
riptide » Tue May 05, 2015 8:32 am wrote:They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.

Thank you Nisiprius for all the information. This is exactly why I like dividends. My family got used to living off the dividends quarterly before with the blue chip stocks. They were a great help to my annual income, and very useful. Now, the dividends are sporadic , not quarterly like I am used to. Thank you all for the list of dividend payouts, I will go look that up as well.
What is the reason "exactly why you like dividends"?

Vanguard Total Stock has been a more productive -- total return investment choice -- than the dividend [income] funds. (VHDYX's inception 11/16/2006)*

Code: Select all

	Vanguard VHDYX							Vanguard VEIPX 						Vanguard VTSMX
Year*	Capital	Income	Total		Capital	Income	Total		Capital	Income	Total
2007 	-0.88%	2.42%	  1.54%		  1.94%	2.91%	  4.86%		  3.73%	1.76%	   5.49%
2008	-34.71%	2.21%	-32.51%		-33.45%	2.49%	-30.95%		-38.35%	1.31%	 -37.04%
2009	 13.57%	3.94%	 17.52%		 13.07%	4.03%	 17.10%		 25.92%	2.78%	  28.70%
2010	 11.02%	3.00%	 14.02%		 11.67%	3.21%	 14.88%		 14.97%	2.12%	  17.09%
2011	  7.12%	3.23%	 10.35%		  7.46%	3.15%	 10.60%		 -0.86%	1.82%	   0.96%
2012	  9.10%	3.49%	 12.59%		 10.27%	3.21%	 13.49%		 13.90%	2.35%	  16.25%
2013	 26.36%	3.77%	 30.13%		 26.66%	3.41%	 30.07%		 30.95%	2.40%	  33.35%
2014	 10.25%	3.13%	 13.38%		  8.35%	2.94%	 11.29%		 10.52%	1.91%	  12.43%

Source: Vanguard
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Re: Where are the dividends with Funds??

Post by riptide » Sat May 09, 2015 10:40 am

YDNAL wrote:
nisiprius » Tue May 05, 2015 6:34 am wrote:If you want those dividends, the obvious choice is to use a mutual fund that focusses on dividend-paying stocks and Vanguard has several. I know little about dividend stock investing because I don't believe in it myself and don't do it, but two obvious possibilities are:

Vanguard High Dividend Yield Index Fund Investor Shares (VHDYX and friends) (an index fund)
Vanguard Equity Income Fund Investor Shares (VEIPX) (active)

I don't think there's any harm at all in using a dividend-focussed fund if you want to use dividends payments as your "sustainable withdrawal strategy," as long as you don't kid yourself that there's much difference between doing that and just selling small amounts of Total Stock.

The "distributions" page for the funds mentioned is showing an "SEC yield" of 1.76% for Total Stock, 3.06% for High Dividend Yield, 2.76% for Equity Income Fund... I'm too lazy to check further than that but I think it means yes, the dividend funds really do pay out more than the total stock fund. At the almost precisely compensating cost of growing less in value per share.
riptide » Tue May 05, 2015 8:32 am wrote:They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.

Thank you Nisiprius for all the information. This is exactly why I like dividends. My family got used to living off the dividends quarterly before with the blue chip stocks. They were a great help to my annual income, and very useful. Now, the dividends are sporadic , not quarterly like I am used to. Thank you all for the list of dividend payouts, I will go look that up as well.
What is the reason "exactly why you like dividends"?

Vanguard Total Stock has been a more productive -- total return investment choice -- than the dividend [income] funds. (VHDYX's inception 11/16/2006)*

Code: Select all

	Vanguard VHDYX							Vanguard VEIPX 						Vanguard VTSMX
Year*	Capital	Income	Total		Capital	Income	Total		Capital	Income	Total
2007 	-0.88%	2.42%	  1.54%		  1.94%	2.91%	  4.86%		  3.73%	1.76%	   5.49%
2008	-34.71%	2.21%	-32.51%		-33.45%	2.49%	-30.95%		-38.35%	1.31%	 -37.04%
2009	 13.57%	3.94%	 17.52%		 13.07%	4.03%	 17.10%		 25.92%	2.78%	  28.70%
2010	 11.02%	3.00%	 14.02%		 11.67%	3.21%	 14.88%		 14.97%	2.12%	  17.09%
2011	  7.12%	3.23%	 10.35%		  7.46%	3.15%	 10.60%		 -0.86%	1.82%	   0.96%
2012	  9.10%	3.49%	 12.59%		 10.27%	3.21%	 13.49%		 13.90%	2.35%	  16.25%
2013	 26.36%	3.77%	 30.13%		 26.66%	3.41%	 30.07%		 30.95%	2.40%	  33.35%
2014	 10.25%	3.13%	 13.38%		  8.35%	2.94%	 11.29%		 10.52%	1.91%	  12.43%

Source: Vanguard
This may be true for total return, but nothing has matched up to those individual companies I owned such as At&t, Dominion Resources, and Norfolk Southern never missing a quarterly dividend and payed some high dividends too!
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Re: Fund Dividends

Post by riptide » Sat May 09, 2015 10:41 am

EyeDee wrote:.
Although Total Bond Market Index Fund (VBTLX) pays dividends monthly, Total Stock (U.S.) Market Index Fund and Total International Stock Market Index Fund pay dividends quarterly. Small-Cap Value Index (VSIAX) normally paid dividends yearly in the past, but I believe it is one of the funds changing to quarterly dividend this fall.

Thank you for this information. I like the way the VBTLX pays monthly for sure. I never have seen a dividend yet from VSIAX for over 1 year!
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Re: Fund Dividends

Post by EyeDee » Sat May 09, 2015 11:00 am

.
Riptide,

You need to check your records as Vanguard Small-Cap Value Index Fund Admiral (VSIAX) paid a yearly dividend of $0.7930 per share in December (Reinvest Date 12/19/2014, Payable Date 12/22/2014 if not reinvested) and a supplemental (housecleaning) dividend of $0.0330 per share in March (Reinvest Date 03/24/2015, Payable Date 03/25/2015 if not reinvested). But as I said I believe it is one of the funds scheduled to switch to quarterly dividends in the fall of 2015.
riptide wrote:
Thank you for this information. I like the way the VBTLX pays monthly for sure. I never have seen a dividend yet from VSIAX for over 1 year!
Randy

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Re: Where are the dividends with Funds??

Post by retiredjg » Sat May 09, 2015 11:06 am

riptide wrote:This is exactly why I like dividends. My family got used to living off the dividends quarterly before with the blue chip stocks. They were a great help to my annual income, and very useful.
If the money was intended for retirement, you should not have been spending the dividends - you should have been reinvesting them so that your nest egg can grow faster.

To put this in very simplistic terms:
  • Company A stock is worth $100 and they earn some money and the stock grows to $110 and they pay it out to you in the form of a dividend so you have a stock worth $100 and a $10 dividend that you pay tax on and that you spend. It seems like free money and the fact that you pay taxes on it get's forgotten till tax time and then if you don't do your own taxes you probably don't even notice.

    Company B stock is worth $100 and they earn some money and the stock grows to $110 and they do not pay the dividend. You now have a stock worth $110 and you don't have to pay any extra tax. In fact, you get to determine when you pay tax, not the company that pays you dividends.
Hmmmm, was the dividend money really free? Which one seems like the better way to save for retirement?

Since you were accustomed to enhancing your salary with dividends, you may have to make changes in your budget. That is probably preferable to switching from index funds to dividend paying stocks funds.

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Re: Where are the dividends with Funds??

Post by dbr » Sat May 09, 2015 11:58 am

nisiprius wrote:. They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.
Really? AUTOMATICALLY both reasonable and sustainable. Are you sure?

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Re: Where are the dividends with Funds??

Post by nisiprius » Sat May 09, 2015 1:01 pm

dbr wrote:
nisiprius wrote:. They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.
Really? AUTOMATICALLY both reasonable and sustainable. Are you sure?
Was going to make a long answer, but I think I'll make it simple: No.
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Re: Where are the dividends with Funds??

Post by z3r0c00l » Sun May 10, 2015 8:47 pm

Aptenodytes wrote: 1) if you invest in the total market a single company, or even a bunch of them, going bankrupt is not a bad thing. It is a good thing, because it helps improve the overall market. Whether Apple lasts forever doesn't matter for total-market investors.
Right, just ask all of those people who have massive accrued capital gains on whaling stock? Entire industries go bust over the course of 20 - 40 years, while others appear and expand. There is something to be said for getting a share of the profits from which you can rebalance into other parts of the total market. If you don't, you are deciding that the company is smarter at investing the money than you are.
Aptenodytes wrote: 2) In 2013, the year Kodak went bankrupt, investors in Vanguard's Total Stock Market earned a return of 33%.
And they earned a few percent in dividends too. However, in the event of a severe drop in stock value, that 33% is gone. All of the profits made by those companies can be lost to speculation or a sudden change in the industry like the advent of digital cameras.
Aptenodytes wrote: 3) thinking that share prices are irrelevant for the long-term investor is a highly idiosyncratic view, not shared by many people here I don't think.
Only in an environment where tax code artificially favors speculation over dividends.
Aptenodytes wrote: 4) For an individual investor, the purpose of owning stock is to make money, not share in profits. If the company becomes more valuable and therefore share prices rise, investors want to make money off of that.
5) "locking-in" gains is an exercise in mental accounting that is considered counter-productive by many people.
Getting paid a portion of profits quarterly is a much safer and more sustainable way to make money than speculating on stock price which favors companies that run like Enron over companies that run like Verizon. One can only extract capital gains by selling the stock. Most of us here seem to prefer buying and holding stock for the long run. Perhaps I should have selected better language, I do not mean "profit taking" or anything of the sort. Just that without dividends, 50 years of good earnings can be lost very quickly. In 15 years Kodak, with a huge amount of cash no doubt reflected in stock price, went from $90 a share to zero. Are we to think that Nikon or Sony stock went up an equal amount? Or did most of that money get spent paying employees and pensions and factory costs? The good news is, as an older blue chip, Kodak more than paid out initial investments through dividends to the long term shareholders.

Investing in stocks could be quite a bit safer if these companies were run a bit more like Con Edison once they become large and profitable.

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Re: Where are the dividends with Funds??

Post by dbr » Mon May 11, 2015 2:23 pm

z3r0c00l wrote:
Getting paid a portion of profits quarterly is a much safer and more sustainable way to make money than speculating on stock price which favors companies that run like Enron over companies that run like Verizon. One can only extract capital gains by selling the stock. Most of us here seem to prefer buying and holding stock for the long run.
Taking and not reinvesting the dividends has the same effect as extracting capital gains by selling the stock. Buying and holding stock for the long run assumes reinvesting the dividends. The only benefit to the return being heavily in dividends rather than in capital gains would be if it were in fact true that such stocks actually offered greater total return at the same risk or less risk at the same total return. It is not incredible that the latter is actually true, but it appears that the argument that the dividend factor is just a partial proxy for the value factor may have some merit. In any case you have to prove that (high or high growing) dividend payers are in fact more effective investments than any particular proposed alternative. Typically the proposed alternative is simply the total stock market, which on average does pay a dividend.

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Re: Where are the dividends with Funds??

Post by toto238 » Tue May 12, 2015 11:23 am

Aptenodytes wrote:
z3r0c00l wrote:
toto238 wrote:
Why do you want dividends? Seems foolish to me. I hate dividends. It's the most tax inefficient way to give money to shareholders.
Because any increase in share price is potentially, even likely to be temporary over the course of decades. Kodak is a great example of this. Anyone who didn't take dividends out, or who reinvested them, would be left with zero despite decades of good profits from this company. Share price is speculation on future earnings and stability. Doesn't matter if your Google stock goes from 100 to 1,000 if eventually it goes back to 100 or even down to zero which is common for MOST stocks eventually. The purpose of owning stock is to share in profits of a company, or it should be. Not to make speculative bets on the value of the stock which not only incorporates cash on hand but also projected future profits and industry trends and plenty of investor sociology. Apple is paying pretty small dividends but they could afford to return tens of billions to investors directly. Buybacks, part of their plan, will surely help improve share price initially. One would have to sell some stock, rebalance essentially, to lock those gains in. Don't presume any company, not the least Apple, will last forever.
1) if you invest in the total market a single company, or even a bunch of them, going bankrupt is not a bad thing. It is a good thing, because it helps improve the overall market. Whether Apple lasts forever doesn't matter for total-market investors.
2) In 2013, the year Kodak went bankrupt, investors in Vanguard's Total Stock Market earned a return of 33%.
3) thinking that share prices are irrelevant for the long-term investor is a highly idiosyncratic view, not shared by many people here I don't think.
4) For an individual investor, the purpose of owning stock is to make money, not share in profits. If the company becomes more valuable and therefore share prices rise, investors want to make money off of that.
5) "locking-in" gains is an exercise in mental accounting that is considered counter-productive by many people.

I agree completely with Aptenodytes. As a total-market investor, I welcome bankruptcies. It improves the total efficiency of the market as a whole as the failed company has its market share eaten by companies that are run more efficiently.

As far as the difference between "sharing in profits of a company" vs "making money" seems to be to be ambiguous. When the company earns a profit, it will either re-invest it in the business (my first preference), buyback stock (my second preference), or pay out dividends. Before tax considerations, stock buybacks and dividends are equal to me. Not one is preferable to the other.

And no, it's not common for MOST stocks to go to zero eventually. Perhaps if you're just looking at the total number of all public companies including the micro-penny-stocks that flit in and out of existence almost daily. But if you're just looking at Small-Large caps, a majority don't eventually go to "zero" in the sense that you get nothing. Many of them get bought out or merge with another company. Many liquidate, providing shareholders with a substantial one-time cash payment. Some are taken private.

YDNAL
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Re: Where are the dividends with Funds??

Post by YDNAL » Thu May 14, 2015 11:34 am

riptide wrote:
YDNAL wrote:
nisiprius » Tue May 05, 2015 6:34 am wrote:If you want those dividends, the obvious choice is to use a mutual fund that focusses on dividend-paying stocks and Vanguard has several. I know little about dividend stock investing because I don't believe in it myself and don't do it, but two obvious possibilities are:

Vanguard High Dividend Yield Index Fund Investor Shares (VHDYX and friends) (an index fund)
Vanguard Equity Income Fund Investor Shares (VEIPX) (active)

I don't think there's any harm at all in using a dividend-focussed fund if you want to use dividends payments as your "sustainable withdrawal strategy," as long as you don't kid yourself that there's much difference between doing that and just selling small amounts of Total Stock.

The "distributions" page for the funds mentioned is showing an "SEC yield" of 1.76% for Total Stock, 3.06% for High Dividend Yield, 2.76% for Equity Income Fund... I'm too lazy to check further than that but I think it means yes, the dividend funds really do pay out more than the total stock fund. At the almost precisely compensating cost of growing less in value per share.
riptide » Tue May 05, 2015 8:32 am wrote:They are perhaps convenient if your personal strategy is to withdraw a reasonable and sustainable stream of income. By using dividend stocks, the company automatically performs this for you.

Thank you Nisiprius for all the information. This is exactly why I like dividends. My family got used to living off the dividends quarterly before with the blue chip stocks. They were a great help to my annual income, and very useful. Now, the dividends are sporadic , not quarterly like I am used to. Thank you all for the list of dividend payouts, I will go look that up as well.
What is the reason "exactly why you like dividends"?

Vanguard Total Stock has been a more productive -- total return investment choice -- than the dividend [income] funds. (VHDYX's inception 11/16/2006)*

Code: Select all

	Vanguard VHDYX							Vanguard VEIPX 						Vanguard VTSMX
Year*	Capital	Income	Total		Capital	Income	Total		Capital	Income	Total
2007 	-0.88%	2.42%	  1.54%		  1.94%	2.91%	  4.86%		  3.73%	1.76%	   5.49%
2008	-34.71%	2.21%	-32.51%		-33.45%	2.49%	-30.95%		-38.35%	1.31%	 -37.04%
2009	 13.57%	3.94%	 17.52%		 13.07%	4.03%	 17.10%		 25.92%	2.78%	  28.70%
2010	 11.02%	3.00%	 14.02%		 11.67%	3.21%	 14.88%		 14.97%	2.12%	  17.09%
2011	  7.12%	3.23%	 10.35%		  7.46%	3.15%	 10.60%		 -0.86%	1.82%	   0.96%
2012	  9.10%	3.49%	 12.59%		 10.27%	3.21%	 13.49%		 13.90%	2.35%	  16.25%
2013	 26.36%	3.77%	 30.13%		 26.66%	3.41%	 30.07%		 30.95%	2.40%	  33.35%
2014	 10.25%	3.13%	 13.38%		  8.35%	2.94%	 11.29%		 10.52%	1.91%	  12.43%

Source: Vanguard
This may be true for total return, but nothing has matched up to those individual companies I owned such as At&t, Dominion Resources, and Norfolk Southern never missing a quarterly dividend and payed some high dividends too!
Sorry for delayed response, I don't visit the Forum often.

In the 8 years provided (because of VHDYX's inception), $10,000 invested in each, ATT returned $14,829.79 and Vanguard Total Mkt VTSMX returned $18,262.97, for instance.

To determine if statements like "nothing has matched up" are true, we must first review factual information which, in turn, helps us understand that total return is what matters - not "never missing a quarterly dividend and paying some high dividends too."
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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