CycleGirl

Why Dividend Paying Stocks Are a Mistake

Like Airlelon, I also invest heavily in dividend paying stocks and ETFs. Airlelon mentioned that he "made his living" this way. I too, use dividends to generate income for living expenses. I think that this point bears mentioning. If the individual investor has a need for current income, dividend-paying stocks provide a more reliable source of cash than growth stocks. Mr Jackson's article seem to assume that the investor's dividends would be taxed then reinvested and would thus be tax-inefficient.
Clearly it's important to avoid companies whose earnings don't easily cover their dividends. Also, it's important to be have a large number of holdings since companies can cut their dividends unexpectedly.
The bottom line is, dividend-paying stocks and ETFs do make sense for some investors.