Here’s What No One Tells You About SCHD ETF

Here’s What No One Tells You About SCHD ETF
The truth about SCHD, the Schwab US Dividend Equity ETF? Watch the video from Paul Gabrail as he demystifies dividend investing, investing in dividend stocks and ETFs, as well as better ways for companies to use their available free cash flow.
If you are a seasoned dividend investor or just starting out on your investing journey, you need to watch this video. Dividends can seem like free money, but we want to show you the do's and do not's about this feature of investing that will surely help you on your stock market and value investing journey for yers to come.
#everythingmoney #SCHD #dividends
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0:00 SCHD: Fact and Myth
1:15 Best part of SCHD
2:15 The catch on dividends
3:25 Can the dividend be supported?
4:48 Misconceptions on SCHD
7:22 Why do people love dividends?
7:38 Free Cash Flow x Dividends
8:51 EXAMPLE (Dividend Payout)
11:11 EXAMPLE 2 (No Dividend)
13:44 Ex2: 10 Yr Outlook
14:48 If you have an IRA or 401k
15:46 Don’t fall victim to
16:20 Benefits of repurchasing shares
19:38 The best course of action

[@noahzimmerman-yg6qt]

Buying of just any ETFs is easy, but buying the right one without a time-tested strategy is incredibly hard. Hence which is best to buy now or put on a watchlist? I’ve been trying to grow my portfolio for sometime now, my major challenge is not knowing the best entry and exit strategies.

[@marcellasilva4015]

The best course of action if you lack market knowledge is to ask a consultant for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since 2023 January. I believe that is the most effective way to go about

[@ralfbrown-kl1gp]

Market behavior can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?

[@marcellasilva4015]

The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny, to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.

[@GeorgianaScallion]

I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.

[@MasonKalair]

Considering selling some of my 3020 shares in $SCHD near its 52-week high with a cost basis of $30.19 to lock in profits. I intend to retain some shares while reallocating funds to ETFs or stocks showing stronger performance. Thoughts?

[@rrandd0]

Well all i know is that you cannot go wrong taking profit at near high. No one ever went broke taking a ~10% profit. It's best if you consult with a fiduciary advisor for sound portfolio restructuring.

[@ApBurger3532]

I was also in a similar position few years ago, i took profit and it went even higher. Upon realizing that a change was necessary, I consulted a fiduciary advisor in 2020 and since then my $500k portfolio has averaged returns of 40% annually through restructuring and diversification.

[@game46632]

Impressive i could really use the help of an advisor as i am closing in on retirement. How can i reach this person?

[@ApBurger3532]

"Kristin Amber Landis" is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment.

[@game46632]

"Jill Marie Carroll" is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment.

[@ryanwilliams989]

SCHD outperformed VTV over 5 and 10 years and is very low cost. Just had bad luck this year. Many of us have a boatload in the S&P500 index in 401k's, so not having apple, Microsoft etc as top holdings (if at all) in SCHD is a good thing. Still have the bulk of my $500k portfolio in SCHD.

[@BiancaSherly-qt6sb]

I’m taking the hybrid approach, VOO, SCHD as my foundation, with growth like MA, UNH, HD. And slow growth like O and PEP. I have a 20 year time horizon. But the best part is I still enjoy my life while I do this. Travel, and buy ONLY things I love. It’s the best combo, plus I love the small victories with receiving dividends/dividend growth/share price appreciation.

[@maryHenokNft]

SCHD is an excellent portfolio addition, but relying solely on it for retirement may not be optimal. I retired at 62, grew my portfolio to $1.5 million in 10 years starting with 35,000 through the help of an investment advisor and dividends now supplement my retirement income. Invest wisely, build your nest egg, and don't sell the chicken that lays the egg!

[@maryHenokNft]

The decision on when to pick an Adviser is a very personal one. I take guidance from *Gertrude Margaret Quinto* to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.

[@StellaMaris-lv2uq]

My needs are kind of unique and complex. I'll contact her nonetheless, and I hope I'm able to make something out of it.

[@DarthDividend]

SCHD is trash

[@bradm3657]

But if you have SCHD in a Roth IRA you won’t be paying taxes on the compounding dividends.

[@user-uo3lu2kk1d]

Finally someone said this , couldn’t believe he didn’t mention this . Guess it didn’t line up with the message he was driving home lol

[@gerald1576]

You are 💯

[@user-ss6lv2su6h]

That is what I'm doing with all my dividend stocks.

[@bradm3657]

@@lazyway4555 give the money back to who? Whenever you retire and need the cash flow you can stop reinvesting the dividends. But to not reinvest prior would be unwise. No taxes either way in a Roth IRA. Also learn to be more respectful.

[@anthonyl.m.8307]

Right, that's what I have mine's in a self-directed Roth IRA :SCHD + MSFT

[@davidhalbleib2467]

The thing I enjoy about SCHD is the ability to buy something once and never having to sell it in order to profit from it. The idea that someone can accumulate and reinvest for 20-30 years and know they could pass it on to their kids to create generational wealth is definitely a plus.

[@DylanIE_]

You could also just buy non dividend paying stocks and accumulate shares, sell off some every year to live on and still pass on the portfolio to your kids? I don't see how this is only limited to dividend stocks. Moreover, you'd leave them even more.

[@davidhalbleib2467]

@@DylanIE_ that's the point dividend stocks you never have to sell you can hold them forever and your share count will not go down. With non dividend stocks that you have to sell in order to make a profit you will eventually get to the point where you'll no longer have the stocks to sell. Dividend stocks are just more sustainable over generations than non dividend stocks.

[@Maher-ub6vu]

@@DylanIE_ He just said "Ability to buy something once, and NEVER!!! having to sell it" You replied with "You can buy non-dividend and SELL OFF!!!!!" Read man, I am more of a growth stock guy, but have both, and the guy said the reason he enjoys it, and you replied with something that didn't make sense...

[@marcush8982]

@@DylanIE_ He said never have to sell. Most people aren’t financially literate enough to sell stocks plus hold enough cash during down markets to be efficient. Dividends can literally be automatically sent to a bank account monthly, great for wifes and kids that have no clue what a 4% rule is.

[@mh9846]

@@DylanIE_but the never run out of shares is something you can’t do with non dividend paying stocks. I can own $2,000,000 worth of SCHD and it’ll pay be about $5,000/ month ($15,000/quarter) i can literally never sell a share. Now I could own $2,000,000 worth of BRK.b and I have to sell some of if to live off of.

[@marcush8982]

The number one threat to a retail traders portfolio is not taxes it’s emotion, when your overall portfolio is down by 20% and you can flip over to your dividend tab and see your dividends have not only stayed the same but grown and you are less likely to make emotional decisions with your overall portfolio.

[@realthatbrian]

Great point.

[@neilblondell4235]

This is a very good point that many don’t consider. They will always show you ‘optimal’ strategies using similar examples as this video - however, an investor who sees their dividends growing each year from reinvestment and additional investment is much more likely to just keep adding and accumulating through all the different market cycles

[@Maher-ub6vu]

Great, great point!

[@southernman6053]

Just sounds like a complete d bag, .. divids are real...this guys is just selling you a pipe dream...

[@katielowen]

Incorrect. Your dividend payments will be significantly lower when your portfolio is down 20%

[@chriscepticon7054]

I personally hold SCHD in my retirement account. I do not hold it because I feel it will outperform SPY, I hold it because it specializes with more blue chip stocks that happen to pay a dividend. Also, I acknowledge dividends are not free lunch, but we all know that stock prices do not always reflect fair valuations, and when I’m closer to retirement, I would not like to rely on Mr. Market’s share price in order to receive income, that’s where dividends play a role. SPY still makes up the vast majority of my U.S. stocks, but I’m buying more SCHD right now on the pullback.

[@coolgaucho]

SCHD specializes in dividend companies so it's part of my portfolio to diversify. This guy shouldn't be comparing them to SP 500 etfs looking strictly for growth.

[@dorenestewart5084]

I just sold a property in Portland and I'm thinking of putting the cash in stocks, I know everyone is saying it's ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.

[@dorenestewart5084]

@@usmansaad526 It all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro.

[@dorenestewart5084]

@@usmansaad526 Hi, please who is the expert assisting you and how do I reach out to them?

[@AndresEmilioSotoRealEstate]

When we make a full recovery you'll be too late. Dollar cost average into stocks you know and do your research.

[@casualsweater]

Waiting to invest is like waiting to start a race .

[@abestewart1990]

That’s a very important question that should not be asked on KZbin comments. You will receive all sorts of “expert advice”.

[@partydog1216]

EXCEPT when your 81 years old like me and the dividends SCHD provides is the difference between mac & cheese and water or steak and Merlot.... it's great for old retired folks. Funds like SCHD can provide great income with reduced risk for certain groups... just saying

[@remowilliams7569]

Couldn't agree with you more.

[@Sunnynyc718]

I sold my schd & bought the apple & tesla dip...for dividend there's better plays...

[@ayoobi1691]

but does the annual return beat 5%? That's what you can get in a high yield savings account that is FDIC insured like a bank and basically just as liquid as a checking account. I am learning about dividends because I want an income stream that can beat outperform the high yield account consistently.

[@TheFishingNomad]

Well you are not the person Paul is talking to. It's obvious he is talking to 20-40 year olds who are decades away from retirement.

[@toyarj37]

Facts

[@realthatbrian]

You are ignoring the fact that one can .live off of the dividends produced by SCHD, and then pass on the stocks to his children. Dividends allow you to have golden eggs without killing the goose.

[@Jacobeach54]

Golden showers> golden eggs

[@henryee]

This is the real reason for dividend investors. Imagine your kids just lack of that amount of money and they could start a business, why not using this dividend to support them?

[@Firul4is]

Also the stock market is irrational

[@benroberts9995]

But I see a lot of 25 year olds obsessed with SCHD, growth when you're young, flip into dividends when closer to retirement.

[@joecombs7468]

​@@benroberts9995100% correct. You should have done this video.

[@WalletInvestUSA]

The idea of receiving dividend constantly is that eventually it might replace part of your salary after many years, little by little and you dont need to sell a single share to make a profit. It adds up after years and you might end up receiving thousands of dollars per month without selling any shares, keeping your capital and doing nothing.

[@valcaron]

Bond funds do the same thing, but with significantly less market risk and volatility.

[@rightangletriangle3188]

Right now, short term T-bill pays about 5.5% with no State tax is also an option.

[@charlesbyrne71]

@@valcaron bonds pay interest which is treated as ordinary income. Qualified dividends have little to no taxes (US tax law) since they are long term capital gains. A single individual can have up to $41K and MFJ $83K with 0% capital gains. Next bracket is 15% up to $459K for single or $488K for MFJ. Most won't hit those kind of dividends annually. If they did they and didn't want to pay taxes then they could resolve the problem by lowering the shares/etfs that generate dividend income. I'd love to have that kind of problem. Each individuals situation is different so everyone should seek professional financial help/advice. Treasuries are interest and taxed as ordinary income. I have treasuries, bonds, CDs, high yield savings, REITs, growth value and index funds, dividend paying ETFs, BDCs, etc. Dividends like bonds help ease the volatility of the market. I understand what the presenter is trying to say, but he's making some generalizations some of which are misleading on dividends and taxes, buybacks, growth and acquisitions. For me It's good to have an array of different investment types in different types of accounts (tax favored, tax deferred, taxable).

[@erlinguroh]

Bond funds don't increase the payout 5-20% a year (depends on the stock) and also the stocks could have more Capital appreciation.

[@bigk8294]

Send me all you cash and we can agree on payment you want. Wait that's a bond. You know you can also have really good stocks in growth firms with no div and watch that balloon and when you need cash sell or get portfolio loan against them? You can also write covered calls and make really good yields. Holding bucket of stocks where 10 are good and 90 are crap and getting 3% is a suckers bet.

[@danbrown7224]

I would rather receive a tax inefficient dividend over having the company pay there management extra bonuses with the extra money, schd might not be the best investment in the market but i feel its a safe one that will grow, for anyone that doesn't know how to pick stocks its a decent investment, and very diversified

[@EverythingMoney]

Cool...thanks for sharing - GC

[@CraigTriciaBailey]

I stock screened on Stock Rover. Only 110 US companies with >$5B mkt cap have compounded at 20% for 10 years. For 25 years prior to retirement, I was a "growth/no dividends is better" investor. As a retiree now, I'm more interested now with dividend growth and steady growing income than trying to find companies that behave wisely with their capital allocation. Paying a dividend forces a certain management discipline which I value. Long SCHD.

[@dnevill]

Aren't dividends tax free if you have them re-invested into a ROTH IRA?

[@illuminaticomics2253]

yes tax free

[@ElvinWright]

Great stocks and I just bought in on them, but I'm interested in making a short-term profit, let's say turn a $150K to $ 500K in 6 months, I'd appreciate tips on how what stocks to buy to make this much profit.

[@ElvinWright]

@@DavidKlein74 That sounds great and how do I connect with her?

[@ElvinWright]

@@PedroBryant9 Okay I just found her website and left a message for her. thanks.

[@Know3ody]

These fucking comments 😂 same shit everywhere.

[@redslate]

S&P500 Bam, no false financial advisor needed.

[@garrydye2394]

You forgot to wait for the name dropping scam. YOu jumped the gun. Wait until your friend replies with the name...@@ElvinWright

[@objectivefreedom5301]

I think the video is missing two angles: 1) If you want to replace your salary, you need cash coming on your bank account. In your example, you will not earn anything during maybe 10 years. Fine if you have a big other source of income 2) Risk management: in 2008, the stock exchanges crashed by 30% to 70%. If you need money at the precise moment, you are dead. However, your dividends are still here and allow you to stay patient.

[@objectivefreedom5301]

Without speaking about a 3rd angle: if you keep your shares during 8 years and suddenly the company has a big accident (compliance like Arthur Andersen or anything else...), suddenly your shares go to a very low point and you are suddenly losing money after 8 years. With dividends, at least, during 8 years, you got some cash

[@ldg1414]

SCHD is still so much cheaper compared to SPY than it's ever been, I'd be a little surprised if it didn't manage to get ahead again in the next 5 years. Consider that SCHD and SPY had nearly the same PE ratio in 2012, now SPY has a pe that is about 50% greater than SCHDs. And the dividend thing isn't as important if you're not in a fairly high tax bracket, and especially if you're using a roth it hardly matters.

[@smithmikey-uh7qs]

As an lnvestment enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?

[@lucustyson-rk8cb]

A lot of folks downplay the role of advisors until being burnt by their own ignorance. I remember couple summers back, after I went through some tough phase financially, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.

[@lucustyson-rk8cb]

...oh, okay buddy, the investment-adviser that guides me is Olivia Lyla Kennedy, you can read up on her, she's quite known as her resume is on the internet.

[@martyd845]

jepi or jepq

[@redslate]

​@@lucustyson-rk8cbShe's not legitimate, and you're a Hype-account.

[@resipsaloquitur1775]

If I own a company, I want a distribution of the profits. Period. Actual spendable cash-flow is the only thing that matters.

[@EverythingMoney]

Yoooo....top comment - GC

[@swissarmyknight4306]

Total returns are what matters, my dude. Dividends are only a part of total returns. If spendable cash flow was the only thing that matters, QYLD would be a good investment (it isn't, IMO). I like to have a certain amount of spendable cash flow in my portfolio, but the name of the game is total returns.

[@chriswoollet]

/thread

[@philipdamask2279]

The problem is that most SCHD investors just let their investment in SCHD grow by reinvesting the dividend. Come tax time they have to pay tax on that dividend unles it is in a tax deferred or tax free account. Hence the importance of tax efficiency. An interesting graph would be SPY vs SCHD with dividends after tax at 20% being reinvested. SPY would look better.

[@ayoobi1691]

@@philipdamask2279 but don't you only pay taxes when you sell an investment and get the cash into your hands? if the dividends are re-investing into the stock automatically, then you aren't really getting paid are you?

[@TheJoaninhaMendes]

Paul, what happens when you sell your stock (that doesn't pay dividends) for a profit?

[@michellebudinick-dores6759]

You get taxed!

[@JustAlf87]

I think the screening process that SCHD uses handles the fundamental questions like "Can the company afford the dividend?" for you. I do agree with Paul's view on taxs, dividends are not a tax efficient way to grow wealth. However, I personally like my portfolios value to growth with the fundamentals of the market and not the speculation like the top 7 names that drive the market are doing. At least for me, it's not about the dividend as much as it's about the selection process that SCHD uses to make what is a rock solid value portfolio driven by organic fundamental growth. Don't get me wrong I want to own names like Apple, Google, and Tesla, but only at the right price. SCHD is my core holding I regularly invest in and I use the dividends and my regular deposits to invest in individual names that I feel have value.

[@TheJosephOuellette]

So if I’m holding SCHD in my Roth I don’t have to worry about any tax liability with receiving dividends, correct?

[@GrayWolf1192]

Correct

[@thesqaanalyst]

If people are looking for fixed income in retirement, SCHD absolutely makes sense. Are there better investment instruments, perhaps. But again, for those looking for a reliable return, this one is solid. If there's any growth in this value ETF, that'll just gravy. EDIT: I also want to add that you're mixing peaches with apricots. You're touting for growth from a value ETF. That's not the objective of SCHD. Leave growth for the non-dividend producing mega caps that help investors grow their nut.

[@joy2come119]

That's my understanding. I'm 36 so I'm 70 percent s&p 20 percent vgt and 10 schd. I figure its best to put more of my funds in growth stocks and sell off in retirement and purchase mainly schd..

[@BobBob-ff1pk]

First off, thanks a million for the quality content and off course for sharing your knowledge. Do I understand you correctly that it would be wiser to choose VOO accumulating rather than the div option? Thanks in advance. Bob

[@GinoMtzRamos]

In your double taxation example, how is it different from selling 10 years later? You still get double taxed

[@clifford629]

The growth due to reinvestment gets reduced by taxes every year. Much like paying a 1% advisor fee will reduce returns 1% compounded.

[@AK-hi4hm]

I thought you don't get taxed on qualified dividends up to $40,000, and aren't most companies In those etf's issuing qualified dividends

[@erics9487]

Idk. I don't make that much in interest and I've been taxed.

[@boston6781]

It depends which state you live in

[@erics9487]

The way it read on google is it's 40k combined income. So, if your taxable income is over 40k you'll oay taxes on your dividends. Not an expert. But, that's how I understood it.

[@Markazoid6041]

It’s not dividends it 40k in income

[@UdieIspec]

$80,000 if you're married and exactly most of these companies would fall under the qualified dividend category so the double taxation point is kind of irrelevant unless you're paying the 20% tax rate coming in at around $500k. + Roth IRA completely skips that as well, I don't think I've ever heard anyone dividends are "free money" in the last 5 years.

[@jamisonm5854]

Projected returns on the S&P 500 over the next 10 years are between 4-5%, but for US large cap value is a bit higher at 5-7%. The thing that's interesting about SCHD is how it's held up to the S&P 500 these past ten years which was a decade of growth outperformance and value underperformance. If value funds come back into their historic outperformance, it would seem that would bode well for SCHD as well. It has a much lower PE, lower volatility, and quality screens for profitability and ROE. I think it's just fine if anyone wants to invest in this fund. Some risks are its concentration (top 10 holdings are something like 40%) which will increase the dispersion of possible outcomes, but I think it's an okay risk. Whatever anyone does, stay the course for 20+ years and you'll do fine (speaking to folks with sensible diversified investments here, not overly concentrated speculative traders).

[@TortoiseInvesting]

SCHD is the core in my portfolio, and I have individual satellite positions build around it to complement areas it misses. I think it will continue to perform well for decades to come, my personal opinion.

[@EverythingMoney]

Thanks for sharing your opinion my man - GC

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@shawnaning101]

​@@EverythingMoneyIf the idea is to have the investment be income in retirement wouldn't the tax liability of having to sell the the s&p 500 bring the gains back down below the gains accrued in SCHD given one may not need to sell the SCHD to have the income needed due to the higher percentage of dividends in SCHD. The idea in my mind is even though I incurred a tax penalty and reinvest it may not be tax efficient today that it would be tax efficient at the time when I need that money. I also worry about market conditions when I would have to sell the S&P500 in retirement forcing me to sell at a time when the market has sold off likely more than SCHD whereas with SCHD I may be able to live off the dividend and never sell. In your analysis here when comparing the S&P500 to SCHD you had no consideration of tax liability to the sale of S&P500 shares. I understand a sale of SCHD would do the same thing but the idea would be to never sell and if we take into account 3.7% of let's say $2,000,000 is a livable amount where 1.2% of let's say $2,500,000 would not be therefore forcing a sale. I also assume taxes will be higher in retirement than they are today which I would think would make the tax liability worse for the S&P500 assuming the sale was required for the S&P and wasn't for SCHD. I personally don't care about a dividend today but view it as more tax efficient to not have to move the investment (incurring the tax) at retirement than it is to be investing in something the idea would be that is the final asset to be held. Yes I paid taxes along the way but I didn't have to pay taxes at a time when the market is down to move it to some income play.

[@phase2re]

I just use SCHD as a replacement for bonds vs. trying to think it's going to protect me on the downside but also outperform on the upside.

[@vampirelawyer1]

Your comparison vs SP500 is silly. The SP500 is heavy tech. SCHD is usually bought to diversify away from tech. I own it because i have heavy tech in other ETF's. If you only own 1 ETF, then yes i think SPY will outperfrom SCHD long term, but most own it to diversify, (hopefully) not as a lone instrument. Also, its drawdowns are much lower and its volatility is historically much less than SPY. Thereore, its RISK-ADJUSTED returns are favorable.

[@eldon515]

i dont know why so many analysts recommend to diversify in worse perfomance etf. You can imagine a world where tech will not be in constant growth for the next many years?

[@EverythingMoney]

Here is the thing my friend...we are only intersted in th elong term...or at least, the educational part of the channel it is all about that.. Thanks for the note - GC

[@vampirelawyer1]

@@eldon515 so you want to go 100% in tech etf??? I own 15% FNGU and hold for the long term (with yearly rebalance), so I also love tech. But you can’t go 100% in tech dude

[@jimd.2683]

Paul your amazing to respond so quickly to a request for SCHD. My question is that you are analyzing the fund as if it was a business or company. As a 60 year old potential investor into SCHD it would be for the primary purpose of the income from the 106 companies held in the fund. I have a large nest egg and need to produce income for the rest of my life and my wife’s. The 1.5% from SPY doesn’t cut it and bonds have no growth or potential increases of income. Your analysis of SCHD from a stock point of view is 100% correct but what about an income vehicle that will diversify me from individual stocks, pay a respectable dividend and allow for growth? Thanks again!!!

[@dstripedape978]

I believe Paul understands this, but his content is more catered to younger age group.

[@EverythingMoney]

Thanks for follwoing us jim...and appreciate the feedback. Paul is simply trying to give an overrview for the long term....investing for your retirement, easy and slow for the long haul - GC

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@johnbrown1851]

I have SCHD in an IRA.... It's taxed as ordinary income when I take a distribution just like an S+p 500 etf

[@tristonmontgomery1297]

I only have SCHD in my Roth IRA, so does that affect the double taxation issue?

[@higiniomorales459]

Yeah it does, the dividends money is only tax once at the corporate level.

[@EverythingMoney]

Should do...double check it though - GC

[@joeyoutdoors]

Of the 49 stocks in Buffett's portfolio, 31 pay dividends. He will receive nearly $6 billion in dividends from those stocks in 2023. Source: Investor Place...

[@erictomchin4032]

Here is one question I always had about a company buying back shares. They buy them back and earnings per share look higher because there are less shares. But what happens to the shares they bought back? Does the company retire them or hold them in some type of account where they can re-issue them later or pay out to executives and employees as part of their compensation package? I get a stock match in the company where I work and was always wondering where the shares came from.

[@philipdamask2279]

They issue new shares or use bouht back shares.

[@mzhenf]

Not long ago, these guys estimated the fair value of Palantir at $5, but now it reached $20. I am glad I did not sell my Palantir.

[@seanm7410]

Question. From my stand point it's the same difference. If you are retired and living off your money when you sell shares you still pay taxes vs keeping your shares and paying taxes on dividends. Correct?

[@nienjuanate6410]

$80k in dividends before fed taxes and state free income tax... vs selling shares @4% rule during bad times. the SCHD title seems like click-bait for algo. Enjoyed the video premise.

[@PaulProsperInvestments]

Nice video and I appreciate your perspective. I've been paying taxes my entire working life. Paying taxes on dividends that are replacing my salary and increasing every quarter is not an issue for me. Plus I don't have to work for this income that is now going to be paying me more than my salary. I have no problem paying taxes on that. Also, share buybacks are beyond my control. Great if a company does it but I can't control that. I can control when I DRIP and when I use my dividend income. I totally agree with you...dividends are not free money. But it is money you don't have to trade your time and effort to enjoy.

[@hos2841]

Idk if I’ve ever heard anyone refer to dividends as “free money” and I’ve been pretty active in the dividend community over the last 4 years

[@Capuarox]

Dividends are a calming factor for the investor. Money comes in and you are satisfied and stay in the market. Another strong case for dividends, is that it leaves less money in the hand of incompetent and greedy executives to do stupid moves. But I get the point, for a foreign investor like me it is a 30% tax, unarmed robbery!

[@EverythingMoney]

Valid point...thanks for the note - GC

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@janshuster1426]

​@@EverythingMoney What tax ? I hold it in a ROTH IRA !

[@bklynbass]

What about using SCHD as a value/income fund to balance out and add diversity to other asset classes like large growth/s&P, international, small cap etc. funds?

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@allabouthegreen8586]

I see your point Paul, I appreciate the perspective. However I see the role dividends play for the average investor. Never having to sell a share to pay for basic needs while in retirement is alluring. Does anyone know if a share buyback etf is a thing? Similar to how SCHD is a dividend objective etf is there a share buy back objective etf?

[@seansavona545]

30% tax rate on a qualified dividend? Why do we fail to put an intrinsic value on getting cash flow through decisions with a lower beta than the S&P? Qualified dividends are either 0 tax or generally 10-15% for the average person who has money. What happens when a company has more cash since they didn’t pay out any of their FCF in dividends and then suddenly the share price plummets? You are forced for a random amount of time to hold onto that investment and not sell it because you are in the red with nothing to show for it? I also feel like you are speaking about the people who chase high yields and that isn’t all of us- I think a lot of dividend investors are okay with making less than the market if it means they can eventually use their cash flow, especially if that means you can make 4-5% from your investments during recessions.. just my thoughts.

[@seansavona545]

Dividends* not decisions

[@aftech7268]

There is a huge Tax write off for the company giving out dividends to their investors thats something u guys are overlooking

[@benitabussell5053]

I want to invest $400k in profit-yielding dividend shares but am not sure which to buy into because dividend-paying stocks don't give rapid price growth and can provide a steady income stream.

[@BrianStJohn-kb1ol]

Good video. I still like the other aspects of the SCHD index based on how it selects businesses in its index though. Also the 13.5x PE ratio vs the 22x PE ratio on VOO at the moment (also no AI hype!). In the long run it prob wont beat the market return but I believe it will be safe to grow at least 8% per year (some of that in the form of taxed dividends) and Im good with that

[@benroberts9995]

So you think AI is all hype? That's also a grave mistake.

[@idahoelkslayer6299]

All my dividend stocks are in roth so very tax efficient.

[@EverythingMoney]

Cool...best of luck my man - GC

[@painlesscotton]

Please Explain why Dividends in My ROTH IRA are TAX FREE GOLD AT RETIREMENT!!!! VERY TAX Efficient inside a ROTH IRA!

[@Robmar40]

You totally forgot about the Roth IRA. You don't pay taxes on earnings and distributions.

[@EverythingMoney]

Thanks for sharing my man - GC

[@1Mannco]

Yes..exactly!!

[@ElectricalTrade]

Nailed it. Great reason to own BRK.a BRK.b. Thanks for all the homework you are sharing with us.

[@roberttakacs2670]

The problem is that the feds previous many many years of near 0% interest rates resulted in many great dividends stocks being chased to insanely overvalued levels. I love the fact that you do individual stock analysis looking for great value. Stocks like Procter and Gamble and McDonald’s are insanely overvalued with very high PE ratios and dividends way less than 5% in treasury. A friend of mine is a former Wall Street pro, and he said at the end of 2021 that many dividends stocks will lose 75-80% due to extreme overvaluation. And this has already played out for many stocks over the last two years. Stocks like Procter & Gamble and McDonald’s are way overvalued with high PE ratios and dividends way less than 5% treasuries. Kudos to you for doing things the smart way. everyone is all about Tech. Add its recent high and video stock. Had a price to profit ratio of 212. If you bought the company for $1 trillion it would take you 212 years to get your money back. Maybe you could comment on this on your website.

[@mj625]

Not arguing with anything said here, but two points didnt get mentioned. 1. People who invest in dividend funds are mostly in it for the CASH FLOW it provides because they may need it to help pay bills. 2. The dividend snowball is a real thing. For dividend stocks/funds that consistently grow their dividends, after about 20 years the payout becomes absolutely huge and cant be beat by any amount of market appreciation. It becomes a cash flow stream unmatched by anything else.

[@ericsolorio1431]

Schd is appealing to me based off the fundamental screening for quality and value it has. Its a value etf with will hypothetically be more resistant in a downturn

[@ktvktv6575]

this is by far the best explain, compare, and demonstration ever! Thank you very much. You got yourself a true follower!

[@mikegiddens9694]

Dude what are you talking about ? First of all dividend are more reliable overall than just buying shares of a growth stock & hoping It'll be up when you're ready to retire. Theres no way of knowing if it's going to be up or down when you're ready to retire & a good reliable dividend stock will still pay out its dividends even if the market or that stocks price is down temporarily. Then you have to sell off your shares when you're retired & live off of selling your shares? That doesnt make any sense to me especially since if you just keep depleting your shares, you eventually end up with little shares or no shares. Unless your up in the stratosphere of astranomical amounts of shares, you wont create generational wealth for your family depleting your shares, plus you also have to pay taxes on selling your shares as well, so whats the difference ? For average every day Joe shmos, trying to reach a 1 million dollar portfolio by retirement is already an uphill battle as it is. Either way you're paying capital gains taxes if youve held the stock long term. Now if you're collecting dividends after you retire, atleast your principle amount of shares is still the same & you're collecting enough hopefully in dividends to live off of. Or you can reinvest half your dividends & live off the rest & that way your principle amount of shares continues to grow & so does your dividends at the same time. And if you're married filing jointly, you can receive up to $83,350 per year in dividends & not pay a single penny in taxes. And with married filing jointly you can receive $83,350 to $500,000 per year in dividends & only pay 15% in capital gains taxes, which is far less than youll pay in income taxes from your labor. So, no, i disagree with you 100% on this matter. Now if you're talking about the company & its decisions to pay or not pay dividends, thats on them, not me, the average little guy investor. As long as companies are willing to pay dividends i will keep investing in dividend stocks & dividend ETF''s. So stop telling companies to stop paying dividends lol 😂

[@Charles-fg6cm]

Most of the videos you are talking what overvalued is the sp500 thanks to Tesla, Microsoft, Apple, Nvidia, etc. and you are buying MMM but you never compare this company with the sp500?

[@EverythingMoney]

Thanks for following my man....feel free to join our community to undertand better the rational and purpose of valUtions - GC

[@jdgolf499]

You shouldn't pain every situation with a broad brush. Dividends can be an extremely tax efficient vehicle for investors. Dividends can be tax free, depending on your income and tax rate. For me in retirement, I will be utilizing tax planning to keep my taxes low, and a LOT of my dividends will generate zero taxes.

[@Fatalinvesting]

Misconception Paul. Upto the first 40k if you filing single you dont pay any federal taxes. Note this is 40k total income dividends plus working income.

[@EverythingMoney]

Ok...thanks for the feedback - GC

[@b2zap665]

Love the energy from your vids. One my investing binge channels!

[@yestohappiness2721]

Well, for the FIRE community - for a person that retires in their 40s or 50s they usually will have no tax rate on qualified div since they will go under the radar with very little taxable income (mostly coming from side gigs and ROTH conversions)... so the tax will be 0%. And who cares that dividends are double taxed - the company pays one tax, while the individual most likely pays 0%. So your argument is a mute point. I get VOO/SPY and people hold a lot of those into their long term accounts (401K, IRAs) but for day to day living after FIRE, the SCHD is a god send - you wait for those dividends like it's Christmas every quarter :)...

[@donnahay5843]

eek ... it's a "moot" point ... I agree with you

[@AnyangU]

You lost me at paying 30% tax on qualified dividends. (At the end of the day, different investors and businesses have different goals. Some people are investing for dividend snowballs and some people are investing for growth and so many places in between. )

[@doktorcopernikuss]

When putting, say, 6K a year in SCHD in a Roth versus 6K a year in a VOO non-Roth, which does better returns down the road?

[@briank1603]

Can you comment on sequence of returns risk when one needs to sell VOO to create income?

[@eddiegill]

Reinvested dividends beat the market over time by a lot

[@Kipoltious]

Many people pay 0 % tax on dividends depending on their yearly salary if I am not mistaken. Also, with dividends in a Roth you wouldn't be taxed. Please update me if I am wrong as I am newly looking at dividend stocks. I think a balance between stocks and risks is nice though and helps me sleep a little easier then going all growth and dealing with the volatility of it.

[@Jack-su4sz]

You can get a room full of financial analysts and half will argue for companies with divs other side not so much. I’ll go with Warren Buffet who likes divs.

[@davidlazarus4198]

SCHD is my largest ETF holding . I think for many retired folks, it is probably a safe investment. The real attraction of SCHD is the low cost, and dividend growth, and it takes into account fundamentals like ROE, Cash flow etc. There are etfs with way better returns over 10 or 15 years with low costs (SPY, SPLG etc). A better investment is SCHG (Schwab Growth etf) which returns close to 13% over 10 years (and also pays a dividend).

[@EverythingMoney]

Cool...thanks for sharing your view 😉- GC

[@timdog1863]

Another great episode Paul. Thank you! I do have one question. If you have a Roth IRA, do you have to pay taxes on the dividends that you receive in that account?

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@bradm3657]

No you don’t,

[@bballgtr]

Absolutely one of the best online; stock investor, mentor, guru to tell the truth to Investors who want help in understanding HOW to grow value without paying a fortune in "Helpful Stock Brokers!" Thank you.

[@preditomedi]

What do you recommend for compounding and avoiding the tax disadvantages?

[@abitler9445]

I think the problem is most companies buy back shares when they are expensive and don’t when the shares are cheap This basically means you are paying a valuation tax on the money. At least with a dividend I can buy other companies with it when the shares I hold get expensive. And the dividend is hard to cut( not impossible I know) and I can actually reinvest during recessions when the other companies have stopped buybacks

[@sebastianoteri7912]

Patiently waiting for an SCHD video from you it’s my 2nd biggest position behind VOO,have watched thousands of videos on SCHD.I think there’s not much overlap in VOO and SCHD and a great complement to VOO also at my wife and I’s pay scale we don’t get taxed on dividends.But I still will always have VOO as my biggest position in my portfolio. Thanks

[@R3tr0v1ru5]

What kind of clown needs both VOO and SCHD lol.

[@EverythingMoney]

Nice one Sebastian....thanks for the comment - GC

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@Youngstomata]

@@R3tr0v1ru5a clown that doesn’t like too much tech in their portfolio?

[@TheLexrockett]

Thank you for this video, it's great. I have two questions: 1- What if you have the money in a Roth IRA? Is it worth investing within that type of fund? 2- For regular investment accounts- don't you have to pay taxes on your growth stocks when you liquidate? If you're getting qualified dividends and paying taxes up front, is that any different than paying taxes on a growth stock that you eventually liquidate? I'm new at this, sorry if these questions are foolish.

[@randyvictor4824]

Once you own a stock for more than a year, whatever the type of stock, the tax on your profit is similar to the tax on qualified dividends

[@reaganviking]

Would it be reasonable to grow your retirement account (preferably a Roth IRA) with an S&P500 index fund or similar, but then for retirement put a substantial portion into a dividend fund like SCHD?

[@Pegaroo_]

Yes, if your investments grow to a point that you'd be happy with the yield if it were invested in SCHD and you want piece of mind that the dividend will come in each month without you having to worry about a market crash messing up your retirement plans then I don't see a problem of selling out of your S&P and buying SCHD so you can live off the dividends

[@pds_37]

to be fair its a great way to balance a portfolio with some value and stability if you have a lot of individual companies without dividends or have higher volitility

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@dusankacurak9520]

Paying the dividend is a sign of a strong and well established business model considering the payout ratio is not high Investing in growth companies is not easy and usually risky

[@SideWalker562]

I couldn't agree more with you.

[@LCox-th3if]

Thanks for the insight! I'm still learning in my older age.

[@andrewt6862]

So here's an interesting case to analyze as well. Consider the same two cases, from an investor perspective and not company, for total percentage return and we'll compare between SCHD and SPY. When we analyze the effect of tax % on capital gains, the mainnn difference is that the tax is either paid immediately, in the case of dividends, and with stock price appreciation & compounding the final percent is taxed from gains. Either way tax is a factor to consider. So looking at recent tax brakets, the expected tax % would vary from person to person however both, most of the time, are within the same tax bracket. Example: I make an annual salary in the 15% tax bracket range for BOTH dividend and capital gains(long term). If I eventually wanted to use this capital that i gained from SPY... Something to consider on both ends not dividends alone.

[@BioHorror]

Yeah, I noticed that he not only ignored tax for needing to sale SP500 stock when you need money, he also changed the comparison to some imaginary unicorn company and talked about tax free a bit.

[@investorwarrior]

One of the best investing education. By far this is the best. Thank you so much explaining the power of compounding and share buyback and taxation. Thank you.

[@blackopsjoker]

Dividend tax is 20% or 15%….not 30%

[@EverythingMoney]

Cool...thanks for the note - GC

[@McRuffin]

@@EverythingMoneyand 0% up to 40,000$ in dividends

[@gustavogodoi1178]

@@McRuffin I think it’s 0% if your taxable income is less than $40K, not up to $40K in dividends

[@dannyduran5264]

How do. You know whats in theire account and if they reinvest or not. Also how do you calculate fcf ? Your like a wizard of stock #'s Paul.

[@crunchynoodles4062]

I took advantage of the student loan pause and was able to pay off my student loans. The monthly payments I was putting into paying off the student loan is now going into IVV (S&P500 ETF). This will provide me a base while learning the market.

[@danbrown7224]

Is there an ETF out there that has only companys that are buying back shares? Maybe Paul should come out with an everything money ETF formed from companies that are buying back shares

[@EverythingMoney]

That is a great idea...but you want the company to buyback when the shares are chip and not expensive. As far as i know that ETF does not exsist - GC

[@MRG365.]

Thank you for doing these videos Paul! I love them! I'm 22 & will be rebalancing my portfolio from single stocks to mostly etfs this week (haven't done too well the past 3-4 years). I'm planning to use SCHG or SPYG for growth etfs (about 60-70%) and then will use SCHD as a smaller portion. I understand SCHD's dividends will be a tax liability, but I love receiving them lol. Will also sell out of the money puts on stable companies - not meme stocks that have burned me.

[@EverythingMoney]

Cool...thanks for following us my man - GC

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@JoeC5050]

VUG+VYM = VTI (in terms of returns)

[@AJohnson0325]

I’m investing mostly in VIG nowadays since I like the underlying companies more than schd after looking at the financials and it’s more diversified. Many of the stocks in VIG I already owned. I still have a bunch of schd but I stopped adding to it. If you don’t know how to read financial statements then I wouldn’t buy individual stocks. If you do, then you can buy some that aren’t in your main etf as a core holding if you want exposure to more tech stocks or something. I would never put a large amount in one stock. Making money is more about surviving long enough for compound interest to have a big effect than it is trying to make a lot of money quickly. Once you’ve reached what’s called escape velocity, you’re set for life.

[@Post4JM]

My son's only 17 and I helped him to invest $2k in SCHD in his Roth IRA. He won't need to pay any tax at all at a retirement age. lol DON'T BE AFRAID OF DIVIDENT $$$$ IT IS FREE $$$$ LOL

[@rodolphebereby6306]

Great video Paul and agree with you. Although I would add 3 comments: - If company buys back shares and share price increase, you’ll have to pay capital gains taxes when you sell the stocks (which will happen one day) so there are taxes on both sides - Sometimes companies are buying back when share prices is high because they made great profits but when share price is low and they are more worried about guidance and outlook they freeze buyback which is the exact opposite they should do… - SCHD is probably less volatile than SPY/VOO so it makes sense that the returns are lower

[@randyvictor4824]

Here’s my 2cents- when company pays dividend, share holder like you and me pay the tax, and if it’s reinvested you will end up paying again when liquidate the stock in future… I think that way we are double taxed when we reinvest… Correct me if I’m wrong!

[@bonsai4322]

What ETF's hold only companies with high return on assets or return on investments?

[@naysayer8383]

My entire portfolio consists only SCHD and I’m good with that. Thank you.

[@SideWalker562]

SCHD is my largest holding...I only buy individual stocks when they are on sale. And even so I will turn them to SCHD later when the time comes...SO, I AM WITH YOU

[@robertswift6101]

mine is schd and jepi

[@Winston0Boogie]

You have no clue what you're talking about. When you get paid in rent it works the same way. You get paid by someone. The difference is I get it from a company instead of one person. Second, the dividend investor gets taxed at the capital gains tax rate if it's long term taxes which is 1+ years. You get taxed less. If you decide to quit your job you make 0 income and pay 0 taxes. When you receive rental income you pay invome tax have fun paying more taxes than the dividend investor. As for free money I have never heard anyone say that. Every dividend investor I know knows where the money comes from. That's a strawman argument. Way to provide garbage for a video. Excellent work.

[@marcdeek5337]

I am not sure to quite understand what Paul is trying to say here. I totally agree with the fact that dividends are not free money and considering a company by studying its capacity of paying dividends but here we are talking about an ETF. The idea of getting a dividend ETF is to receive regular payouts by companies selected for us. The video compares an ETF with how to carefully choose a dividend paying company…maybe I am missing the point. I am still trying to figure out if SCHD is a good or bad choice…🤷🏻‍♂️ That being said, I regularly watch your videos and they are great. Thank you for the work and information you pass on.

[@LG-tw5vm]

What is the link to your morning channel that Mo does at 9am? I can't find it.

[@Markazoid6041]

I have always heard that SCHD beats VOO And is less volatile in a down market

[@EverythingMoney]

With dividinds cuts...it will always be more volitile...SPY is much more stable - GC

[@Markazoid6041]

@@EverythingMoney well dividend cuts are not a guarantee, particularly in the short term. And in a Roth, you can always move to VOO if necessary without a tax hit.

[@AnthonyLauder]

I tend to avoid dividend stocks, for tax reasons, however, they do have one great advantage: at least you are getting something real out of the company over time when they pay you a dividend, and even if the stock one day crashes to zero, you haven't lost everything. In contrast to a company that pays no dividend and reinvests all of its free cash flow by doing buybacks or paying off debt, which are admirable, yet the company could still collapse, leaving with you with nothing at all.

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@user-iw4co5ds1v]

but if you have SCHD or any other high dividend stock in a Roth IRA then it is all untaxed, correct? I'm learning, its a genuine question. The main thing I see as a benefit of SCHD is if you get enough of the stock you can use the dividend tax free if its in the Roth and then your total is still compounding indefinitely. Be cool to leave that to your kids. Anyone chime in if im way off im a rookie

[@HafeezBlackLeg]

said someone who's investment company has been established for almost 18 years and yet we still don't know how it has performed. Paul isn't a good mentor if we didn't know his performance in stock market. How about give us some more insight about your portfolio, we would like to know how you do

[@samchahal9869]

SCHD is very stable to me (I said to me ☝️) it’s like saving account for me because I have emergency saving in my bank, fixed amount goes to other stocks and etfs, 10-15 percent for opportunities and rest in SCHD.

[@davidwilks4123]

Dude ignore these youtube clowns, this guy isn't even licensed. Find a FINRA certified CFP fee based financial advisor. Fidelity Investments is one of the best broker dealers.

[@johnmininger7472]

The only case that I can make for including it in a medium to long term portfolio is that an ETF like SCHD is less volatile than VOO or SPY while providing a decent long term return and even then, I think that only matters if it is a taxable account where you might need those funds in an emergency. I think the S&P 500 should be your largest holding, followed by growth.

[@mh9846]

SCHD has been a bond equivalent during this past few months. Definitely helping keep the portfolio afloat since I’m also heavy TSLA.

[@TpriestJr]

Schd and schg. Best of both!

[@Deadeye313]

This is the biggest question in investing right now: do you invest in VOO and dump later into SCHD or buy SCHD and hope the yield on cost goes up over time. That is a video to make and would finally solve that last great defense of SCHD "dividend yield on cost will go up over time and that makes it worth it" How true is that?

[@thecomiccircuit]

but isn't the point of dividends to live on dividend payout while principal is untouched? If I cash out the stock shares, I chip away at the principal even tho the stock price stays higher in value over time?

[@Gregatseasonalsteins]

Paul, you aren't presenting this honestly; 30% tax on that dividend (payout)? Also, what about the reinvesting and return opportunities with that dividend payout or monies paid out to the shareholder? That needs to be factored in. By the way, I love your channel and your breakdown presentations. Great stuff.

[@EverythingMoney]

Nice one my man...thanks for following us - GC

[@tomcat8662]

Dividend paying companies are a bad idea for middle-aged folks because that’s typically when you earn the most income over your career. Being issued a dividend means you have to pay taxes on it at a much higher rate than when you first started out working. However they’re great for retirees or people who choose to supplement some of their income assuming they have enough saved up at that point to not have to work a full time job.

[@Metal_Stacking]

Schd is a qualified dividend. Married with standard deduction makes dividends not taxed until over 110k in income. Considering this is well above the median for most people, taxes on schd dividends will be 0%.