Topic
Dividends
Whether dividends are irrelevant or essential is one of the longer-running debates in finance. These articles cover both sides.
Academic finance says dividends are irrelevant. A pound paid out as a dividend is a pound that came out of the share price, and the total return is the same. The behavioural finance argument says dividends matter enormously because they keep investors invested - watching cash land in the account is what stops people panic-selling in a drawdown. Both arguments are correct. Which one applies to you depends on whether you're optimising for the spreadsheet or the human.
Are Dividends Irrelevant? covers the Modigliani-Miller argument and where it breaks down in practice. Why Dividend ETFs Can Be a Powerful Long-Term Strategy covers the behavioural case for UK dividend trackers. Dogs of the Dow is the simplest contrarian dividend strategy. Is Yield on Cost Useful? covers the metric that dividend investors love and academics hate.
5 articles
What Is Dividend Investing?
A high dividend yield can mean a healthy company paying you back. It can also mean a dying business handing out its last cash. The tests that tell you which you're looking at.
Is Yield on Cost a Useful Metric?
A 20% yield on cost feels like investing genius. The dividend doesn't care what you paid in 2008. The metric most income investors brag about has a flattering lie buried inside it.
Are Dividends Irrelevant?
A Nobel-winning theorem says dividends don't matter. The maths is airtight. The behaviour isn't. Why income investors keep ignoring the economists and out-earn them anyway.
Why Dividend ETFs Can Be a Powerful Long-Term Strategy
A share price is an opinion. A dividend is a fact. That single difference is why income investors panic-sell less than growth investors when the market drops 30%.
Dogs of the Dow: A Contrarian Dividend Strategy Explained
Want the laziest dividend strategy known to mankind? Buy the 10 highest-yielding Dow stocks each January, hold for 12 months, repeat. Whether it still works is the better question.