Dividend Investing Series

Video Tutorials
#1

Hey, everyone.

We’ve just started a dividend investing series on our Youtube channel. In the first video, we cover the following topics:

  • The goal of dividend investing
  • What is a dividend
  • Тhe pros and cons of this method

We’d love to hear your thoughts in the comments :point_down:

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#2

It’s a bit lacking for me. It would be good to mention that:

  • What should matter to an investor is total return (price appreciation + dividends), not just the dividends
  • Dividends may be taxed unfavorably in some countries compared to capital gains
  • A dividend is not money out of thin air, so when a company pays a dividend, the price falls by the amount of the dividend paid
  • An investor can create their own dividend by selling some shares
  • A dividend ETF (e.g. Vanguard FTSE All-World high dividend) is better than picking individual stocks, as it’s very diversified
  • Focusing on just the yield is a good way to fall for a value trap
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#3

However, the dividend may suffer from double taxation if held in a taxable account. Vanguard pays 15% tax on the US dividends. A UK taxpayer pays an additional 7.5%, 32.5% or 38.1%. Owning shares instead the ETF has the advantage that the total tax does not suffer from the +15% which Vanguard must pay up front on any US dividends in the ETF.

The basket of shares in VHYL probably return around 3.6%. 40% are US shares. The ETF pays 3.18%. So the ETF is not as low cost as it might first appear.

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