Published Mon, 30 Sep 2019 05:36:57 -0400 on Seeking Alpha
I'm a firm believer in investing in what interests you.
Of course, diversification is a good thing and should be sought, but investing in individual companies requires regular attention and research. On an ongoing basis, shareholders need to be watching the company's performance and asking critical questions about their finances. Is revenue growing? How is earnings growth? Are the margins deteriorating? Is the dividend well-covered?
One of my overarching goals is to maintain a portfolio that mixes high-growth/low-yield stocks with low-growth/high-yield stocks. But, personally, I'm less interested in or excited about the low-yielding names than I am about at least moderately high-yielding (3%+) ones. I love checking my account for upcoming dividend payments and planning how to reinvest them (if I'm not DRIPing them).
Disregarding taxes for a moment, if given a choice between an equal amount of either capital gains or dividends, I would always choose dividends. Since capital gains are only "real" if I sell the stock, dividends feel more concrete, more definite, more permanent, to me. I can immediately take that dividend and use it to acquire "more" assets, which is substantively different than the nominally "more" in asset value one gets from potentially fleeting price gains.
That said, I cannot deny that there is tremendous value in the low-yield/high-growth names, both for capital gains and for future income. They may not interest me as much, but I would still like... Read more