I learn this text on dividend investing and this publish.
The argument towards dividends appears to be two-fold: 1) you are taxed on the dividends, and a pair of) the share worth drops in worth by the quantity of the dividend.
My query is about #2. How a lot does this matter if the value of the inventory rises? For instance, if the inventory is $100 at present they usually situation a $4 dividend, then supposedly the value will drop to $96. However what if the value of the inventory will increase over the yr and it is $125 they usually situation a $4 dividend, so the inventory is $121. Aren’t you because the dividend investor method forward now?
I’m primarily asking as a result of I’m attempting to know SCHD which has been going up over the previous 6 moths. Though you get taxed on the SCHD dividends, it doesn’t seem to be #2 (share worth dropping in worth by the quantity of the dividend) is happening sufficient to make the inventory unattractive, if something it appears very engaging.
Additionally, since VTI pays dividends, would not it cope with the identical #1 and #2 points?
Thanks!
