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Tough Questions To DG Investors


Questions on DGI.

{Some of my opinions in 1 sentence}.

Let's discuss!

1) Currently dividends are taxed at historically low rates (in USA). US congress change tax code quite often (in my taste). What DG investors / DGis/ can do to protect low taxes?

{I think to communicate their preference to representatives}

2) DGI is a long-term strategy base on compounding, so investor need to wait ~15-20 years for it visible fruits. Usually BoD together with CEO/CFO decide on dividends. Average tenure of these people is smaller than 10 years ( Often CEO/CFOs are hired outside the company. What do allow us (DGis) to hope that these new people will continue to increase dividends?

{I think to communicate their preference to CEO/BoD - see}

3a) When I started DGI in 2006 it wasn't mainstream approach till ~ 2014 and mostly small investors played this game. So many good DG companies were available at good prices (esp in 2008-2009) and probably it was possible "to find alpha". Nowadays DG is very popular and many institutions have DG ETFs and MFs, so thousand eyes look on the same stocks. As the result prices are probably efficient. So can a DGi hope now to outperform with well-known DG stocks?

{ I doubt from beginning of my DGI journey in 2006, I think in long run both should lead to almost the same result, see}

3b) Nowadays because of very low interest rates dividend yields are small. Many DGis want to have high-quality companies, but their yield is lower than SP500 yield. Unfortunately in reality nobody knows DGR even for next 3-5 years and of course for a long run (15+ years). Also death rate of public companies is quite high (although it seems that life-time of DG companies is longer than average firm - see and while it is hard to imagine that US economy will die in next let say 25 years (average lifespan for a US retiree and many DGis are retirees). So what is advantage to invest in good DG stocks versus broad market? See also


4)  Are DGI and pure buy&hold strategy compatible? See and as well as for details.

{Not pure B&H (aka "never sell") but should be quite close to it; see also}

I really want to know opinions of fellow DGis on these topics. If you have one please write comment or FREE SA article of blockpost and notify me via SA email.

Thank you


22 March 2019

NB: Initially I posted these questions in Mike Nadel's article, and they created lovely discussion there (