Recently I was featured in an article called “Experts say dividend-paying stocks are not for everyone.” Since the article is by The Canadian Press, it appears on many different sites and I certainly had my two minutes of fame.
In the article, Robb Engen from Boomer and Echo pointed out that dividend investing isn’t for everyone and that most Canadians are better off focusing on growth by investing in index ETFs.
So, is dividend investing stupid?
To be perfectly honest, I’m really tired of this age-old index vs. dividend investing debate. You can find strong reasons and points for both sides. Can’t we agree that investing in either index or dividend stocks is far better than hiding your money under your mattress?
For the most part, I do agree with Robb. For most Canadians that want to invest passively and have peace of mind, it is easier and more straightforward to invest in index ETFs, like the all-in-one ETFs or all equity ETFs. If you want to do a more hands-on approach by investing in dividend stocks, either do a 50-50 ETF & dividend approach, or a mix that you’re comfortable with. Pick 10-20 dividend stocks using the be an owner narrowing down strategy.
- How to Start Investing in Dividend Paying Stocks
- How to start dividend investing with as little as $1,000
Having said that, I truly believe it’s important to remember that personal finance is personal. Take mortgage, for example, some people prefer paying off their mortgage as quickly as possible while some prefer using a mortgage as a way to execute Smith Manoeuvre. Is one more correct than the other? I don’t think so.
Similarly, when it comes to investing, I do not believe there’s a one size fits all solution. We all know that some people prefer real estate, some prefer index funds, some prefer dividend stocks, etc. Since we all have different personal circumstances, what you invest will come down to personal preference. Bluntly saying that dividend investing is stupid and that dividend investing means ignoring total return just seems silly to me.
Let’s not forget that we are hybrid investors –we invest in both dividend stocks and index ETFs. So we not only care about a stable dividend income, we care about overall investment returns too!
Good reads from the PF community
Here are some good reads I’ve come across from the personal finance community. Enjoy!
Chrissy and her husband M retired last November. She asked if they retired at the worst possible time? I really appreciate her honesty and details in her post – “Now that I’ve shared the ugly truths and all the mitigations we’ve put in place, it’s time to discuss the elephant in the room: do we regret our decision to FIRE when we did? Both M and I can honestly say, “NO WAY—not for a second!” Early retirement has been amazing, especially for M.“
Mr. Money Mustache posted for just the second time this year and his latest post was a good one: Finally a stock market crash! – “This has in turn triggered the more skittish stock investors to run for the exits and completely change their view of our economic future, flooding the financial news with red ink and scary headlines. The bottom line is that the overall US stock market is down about 20% over the past three months. Which means that if you add up your net worth as I do occasionally, you may find that almost a fifth of it has suddenly gone up in smoke. Fortunately, this is just an illusion. While the human side of every war is awful and you should help out if you can, the financial side of this panic is very normal and we were overdue for something like this to happen.“
My heart goes to all the innocent kids and teachers that lost their lives in the recent school shooting in Texas. I do not understand why it’s so easy for people to get assault-type weapons like the AR-15 in the states. Tanja was fed up with the latest news and wrote a great article called What you can do about guns when leaders fail us – “If you own shares of gunmakers, which you absolutely do if you hold standard market index funds, figure out how to go to the shareholder meetings and then get loud. Demand that gunmakers stop putting profits over lives and insist they stop making assault rifles. Organize protests outside of shareholder meetings. Most shareholders have never had to hear from the public on this, so get loud and make them squirm. Activist shareholders have succeeded in redirecting companies away from harmful acts, they have succeeded in getting activists voted onto boards of directors, and they have succeeded in ousting leadership. Everything is on the table, so bring the fight directly to the company and make them do better.“
Speaking of gun control, I think Japan has the right idea. Did you know that in 2015 only six shots in total were fired by Japanese police?
GYM at Gen Y Money shared a few ways on how to save on groceries in Canada (despite crazy inflation) –“You’ve probably heard about this before, but shop the perimeter and ignore the middle part of the grocery store. This is one way on how to save on groceries in Canada. The middle area is where all the higher priced stuff is housed anyway (not to mention groceries that aren’t really “food” aka packaged and highly processed foods).” Some readers may recall that last year I compared Costco, Walmart, and Superstore to find out which one is better at keeping prices down despite inflation.
Thanks to GYM’s article, I stumbled upon Canada’s Food Price 2022 Report. I found the two tables below particularly interesting.
Based on this report, our household would spend $13,442.26 on food in 2022. This translates to $1,120.19 per month or about $3.07 per meal per person, not including dining out. For comparison, last year, we spent $1,178.14 per month on groceries or $3.23 per meal per person. If we include eating out, on average we spent $4.13 per person per meal in 2021.
One thing to keep in mind is these numbers from Canada’s Food Price report are simply estimates. Since we try to eat organic food as much as possible, it makes sense that our food spending would be slightly higher. However, the price report does provide a good starting point for comparison purposes.
I have really enjoyed watching Joseph Carlson’s videos. Here’s one where he went over why Costco is doing better than Walmart and Target.
Despite the fact that we’re living in the 21st century, we still face a lot of discrimination on a daily basis. Bitches Get Riches wrote about 7 ways our society financially punishes single people – “Many, many disabled people have no choice but to stay single, despite being happily committed to a partner. It’s because we baked shame, skepticism, ableism, and eugenics into the fabric of our laws. It’s disgusting and shameful.“
Speaking of ETF investing, Dale at Cut the Crap Investing updated his ultimate asset allocation ETF portfolio page
Jim from Route to Retire wrote about the 3 attainable characteristics that drastically improved his quality of life – “What I am saying is to consider doing something new and different in life. Maybe that’s something adventurous like white water rafting or going on a safari – or even something like bungee jumping.“
I hope you enjoyed reading these articles as much as I did.
Have a great weekend everyone!