The Truth About The Dividend Snowball - What They Don't Tell You

This video looks at dividend investing and the dividend snowball and how many people forget to mention key things about it especially some of the downsides that may end up hurting investors in the long run.
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[@Abdul_Rahman86]

My approach to dividend investing is a bit different. I didn’t look at a huge sum. I broke it down to expenses: my cheapest expense is my phone bill. £10 per month. If I can get £10 per month dividend from a quality dividend etf then I will never pay for my phone ever again. Next it was my haircut. £40 per month. And so on and so forth

[@kinghaza2440]

Exactly how I’m approaching it, I’ve wrote out all my monthly expenses such as travelling, bills etc and working towards paying each thing of one by one

[@Fotospectra24]

This is how I am approaching it too. first to cover necessities to step away from “surviving”. Then next phase will be into making ex income for (as I continue to distribute my stable and dividends earned ) for secondary spending. I stray away from the whole “literary minds set” as it’s more of a journey .

[@eio4528]

I agree and its how I do it as well but with a twist. The net outcome will be the same but the psychology behind it is not any different than how many "money gurus" suggest paying off debts. I think knocking out bills like this makes for a stronger sense of progression. My method differs slightly where the dividends can buy an additional X number of shares. Paying off bills is nice but I want the compound rate of making dividends do additional investing for me.

[@Mike1973NJ]

Same approach here! Actually, I tell people to invest in a different stock for each bill.

[@Mike1973NJ]

You need to take a chance and build 1 stock up to at least 1000 shares! People just starting out can't afford to diversify! Use the profits from the dividends to start another stock!

[@edcastillo4456]

A majority of the dividend videos I’ve watched have mentioned almost every point you’ve discussed. Most average Americans don’t save or invest, so if someone watches a dividend snowball video and is motivated to start a DRIP at $200/mo, they are ahead of most people.

[@TobyNewbatt]

If that's the case then you should see the kind of comments this video still gets - people think its magic free money! :) Of course it's good to start investing, but thats like showing someone how to hop on one leg rather than teaching them to walk with two legs. If you learn something one way, and then realise that it's costing you money in the long run you'll stop doing it :)

[@appkeytechology]

That's pretty odd. MOST videos that I have watched (well over 200 videos) have barely even mentioned ANYTHING that is mentioned in this video. However, they definitely mentioned their "course" and "private discord" lol.

[@openyoureyes1776]

Thank you.

[@AlecOnline.]

This is exactly what i’ve been doing and incorporating some growth. It’s doing quite nicely so far.

[@lasoga2125]

Very true. I was explaining the same thing to my family. That even the the market crash 20 or even 50% they would be better off. Because losing 50% of 250k is still a whole lot more than zero which is what most americans have saved.

[@bardatwork69]

I am an American and have both growth and dividend stocks. In America on qualified dividends we can make 41,676 a year before we are taxed. Also many people including young ones know that social security may not be there for us so this extra income will help us in retirement. As long as you invest in great companies like KO, PEP, JNJ etc then your dividend is relatively safe. Don’t chase yield and fall into a yield trap and have some growth stocks in your portfolio then I think it can be a solid retirement plan and a great portfolio.

[@Anonymous-ld7je]

If you're married, the amount of qualified dividends you can receive before being taxed is double that amount. Most people will need a multi-million dollar portfolio to exceed that amount of dividends in retirement, so it's almost a non-issue. Qualified dividends in the US are extremely tax favorable to retired people no longer receiving an active income from work. Dividends in a taxable account for young, working people may have tax consequences, sure, but saying that it isn't viable or tax efficient for retirees shows a fundamental misunderstanding of how dividends are taxed in the US. The vast majority of US retirees would pay an effective tax rate of either 0% or something not much above it on qualified dividends. You can make the argument that dividend investing underperforms growth stocks or basic broad market index fund investing, sure. But that's not a particularly strong argument, in my opinion. It's easy to look at the last 10 or 20 years and say that, but long term data over periods of 50 years or more consistently show that dividend payers, growers, and initiators outperform non-dividend paying companies and dividend cutters on a total return and risk adjusted basis (a several minute web search can find you multiple studies and back tests on the topic). Then there's the good old dividend irrelevance theory. Well, if dividend payers and growers outperform on a total return basis long term, then the dividend irrelevance theory is itself irrelevant. If all an investor should care about is total return, and disregard dividends, then ironically the best way to do that is invest in dividend paying and. growing companies. Obviously all these factors could be and likely are very different outside the US. But the argument against dividend investing in the US is weak and misinformed at best, and is downright wrong and harmful at worst.

[@oleboy4332]

Fake account

[@bardatwork69]

@@oleboy4332 fake account who are you talking about. Clearly not me

[@oleboy4332]

@@bardatwork69 no, sorry, wrong one buddy

[@mstefa007]

@@Anonymous-ld7jethe argument is not dividend vs non dividend - argument is whole market vs only select dividend stocks . You’ve just heard proof that only 1% of companies with dividends return better than the market average. So you have 99% chance to make less money by picking dividend than just buying full S&P 500 ETF ( who also pays dividends)

[@cuttru8041]

the inflation problem is pretty easily solved if you invest in companies that consistently grow their dividends just like J&J does in your example. If the dividend growth rate meets or exceeds inflation, your purchasing power keeps up or exceeds the effects of inflation.

[@appkeytechology]

Problem is that MOST people aren't going to pick 20 stocks that do that or are they going to have at least 500k over the next 20 years to invest. The BEST STRATEGY is to mix it up. Someone chasing purely dividend investing is a dog/tail combo. Unless, of course, they receive a large windfall of money to invest.

[@eliotness107]

For me it works to invest for dividends because that keeps me investing where as if i invested only for growth i would probably have quit as soon as my portfolio dumped during a crash, but seeing those dividends coming in keeps me staying in the game for longer so yeah i guess for me its all about the motivation to stay in the game for longer.

[@TobyNewbatt]

Fair enough if that keeps you investing then that’s the most important thing 👍

[@davidbrooks8809]

But it's not extra money it's actually your money being invested😮

[@EK-gr9gd]

It is "extra" for the price of a share, doesn't rise or fall just for paying dividends. You can't argue that the price of stock "A" would be higher if the company hadn't paid a dividend.

[@eliotness107]

@@EK-gr9gd Some people dont see the difference in company structure when it comes to dividends or no dividends. Some companies do not intend to grow their business regardless of how much profits they make each year, and other businesses only care about growing their business. They just assume any dividend is just taken out at the expense of the shareholder, which is not always the case

[@miri9600]

Most important thing you didn't mention is that many companies are rising dividends as well. By selecting companies from different sectors you get diversified and you can reinvest dividends paid into most underrated ones. If you buy index you just have to buy them all.

[@mikewill1740]

True but only because their stock value grows. But you are still paying more for the stock unless you got it early when cheap or on a dip.

[@heldercosta8096]

Ok. You forgot to tell about the dividend increase, and skip the part that you don't need to see your shares to create an passive income. I know its ineffective on taxes but it's a strategy like others on the market. There´s no perfect strategies on market, only the one that works for you. Great work. Greetings from Portugal

[@TobyNewbatt]

Thank you for watching! There are pros and cons yes, always more details to discuss. Like you say find what works for you 👍👍👍

[@TobyNewbatt]

@@its1me1cal yeah I forgot to talk about that on purpose as it’s free money….seriously do you not understand total returns genuine question. A dividend is not guaranteed but please go ahead and cherry pick a stock that’s done well 😂

[@kippsguitar6539]

​@@TobyNewbattor dividend aristocrats with a long term proven record of increases, plus the s&p 500 has also soared 2500 % over 40 years and the Nasdaq a lot more, of course that is absolutely no guarantee, great video once again countering the con men selling a half truth on those videos, bravo

[@kippsguitar6539]

And the Nasdaq up 3300% in 30 years for those lucky enough to have stuck in there

[@roddywhite4161]

Do the dividen increases go up an average of 10% a year?

[@chrishamlin7552]

As a dividend investor, I can say this is a good video. The most ideal scenario is for a young person to start a Roth IRA early in life and buy into a low cost dividend ETF. Dividends are then tax free, you'll have a long time for it to start snowballing, and the losing stocks will get dropped by the fund manager (hopefully). Withdrawals will come out tax free as well and the dividends will help make your retirement last longer.

[@TobyNewbatt]

A very key point yes. If you really want to do this make sure you use tax advantaged accounts! As otherwise dividends are taxable whether you reinvest them or not.

[@Rshen11]

Retiemwnt accounts are not liquid..and you need a spouses permission to withdraw from it.. if married . Most people will lose half their retirement count in divorce..

[@chrishamlin7552]

@@Rshen11 Why would you need your spouses permission? IRA = Individual Retirement Account. I setup my spouses retirement account and my name is nowhere to be found on it. By design it can't be. Divorce is a special circumstance, but I would assume you could argue greater protection on an IRA vs the alternative (Taxed-Brokerage). Also, my Roth IRA is very liquid and can be withdrawn from at any time. In some instances penalty free.

[@Rshen11]

@chrishamlin7552 your right.. I was just making a general statement.. it depends on the retirement plan you have.. I have a retirement plan through the gov.. tsp.. and yes, I need to get permission from my wife.. even though she's not on it..I personally liken a tax deffered cause I avoided state and city tax.

[@mstefa007]

Even S&P ETF is dividend ETF. Then why bother with others?

[@Joe_Mugda]

Dividend gives you motivation to invest for a long term. After maxing out your free tax (in germany its 1000€ per person) then you can move on to growth stocks. As for me i intentionaly invest in dividends stocks because i want to see cash flow and it keeps me motivated.

[@ri-jo]

You can also invest in dividend stocks accumulating.

[@matthewcoreyhall]

There is a psychological aspect at play with dividend income, it's a back-up along the way with income if you need it, and provides small carrots along the way. Whatever helps people invest and gain financial knowledge through failure or success is a win. Ultimately they will be better off for it.

[@TobyNewbatt]

For sure investing is hugely psychological. If the alternative is not investing vs dividend investing then fine. But just as long as people know all the information and understand they will probably underperform by a long way, then that's fine. But as you know many people have no idea about total returns and where a dividend comes from.

[@ciaoatutti11111111]

Really good.. Simplicity and feet on the ground is needed in this discipline

[@samr8603]

Dividend investing is one of my investment funds. The other three are my pension, my wife's pension and her ISA. Each one has their part to play.

[@AJohnson0325]

If you’re buying for dividend yield instead of growth then inflation is a valid concern. However if you are buying dividend growth funds where the dividend cagr is much higher than inflation then not so much. By the time I retire, the 2% dividend yield will double several times. Building wealth in anything takes a long time. Real estate is arguably better in the United States due to leverage and tax benefits but you need a lot of money for quality investment properties.

[@OneAndOnlyMe]

It is possible. I went from £40,000 to £450,000 in 10 years (in an ISA). This was a combination of dividends and trades, and savings and bonuses. Ten years may seem like a long time, but it's really not that long.

[@87vortex87]

I finally convinced my wife to go full boar on investing. Currently we're putting in 6.6k per month on retirement, paying of mortgage, and traditional investing. Now, it comes down to discipline to keep it up.

[@TobyNewbatt]

Impressive keep up the good work, hope you reach your goals!

[@quokkapirquish6825]

A boar market! I like it

[@damiennicolas6528]

But your wage will follow inflation as well. That’s why we should talk about a % of your income into investing and trying to keep the same % over the years.

[@miri9600]

and companies will rise dividends paid as well

[@DrDavidRogerPHD]

Finally, someone being realistic about living off dividends

[@TobyNewbatt]

Thanks Bryan! I'm not against it I just really want people to understand the pros and cons and think things through and provoke some thinking :)

[@onlygameplay7117]

they up there dividend by atleast 3 percent it's literary inflation adjusted. lmao.

[@TobyNewbatt]

@@onlygameplay7117 Sure companies can, and do, increase their dividends. But you realise that total return is all that matters? You can increase your dividend all you want, but if you lose value in your share price then your total returns will suffer. There is no free money :)

[@martinrbookermb]

​@onlygameplay7117 I agree with you, if you buy a divided E.T.F like SCHD then they increase in value and divided payments over the long term? It's all in the charts.

[@TobyNewbatt]

@@martinrbookermb Martin again. Total returns are all that matters! You can increase a dividend all you want but SCHD has underperformed the market if you look at total returns. It’s literally moving money from one pocket to another. Please tell me you get total returns?

[@Montages-yc6js]

The thing is if you start investing in dividend stocks when you are Young your returns Will eventually be Much higher. For example Im currently 18 and have been investing since i was 15 and have just about 15000 dollars invested. I make 100s of dollars every year to reinvest aswell as putting in money from working a job while going to school. At this rate i Will be able to retire at 40 without worry.

[@omydiddy]

I don't think retail investors should be trying to beat the market when most professional investors can't do it. Of course investing in the s&p is safe but don't feel bad if your hand pick portfolio only grows 2%. It's still better than the large majority of people who barely have any money saved.

[@MYIbeats]

Discovered your channel, and your quality and information is bang on! Subscribed 🙌🏼

[@TobyNewbatt]

Welcome cheers mate!

[@greenyo77]

The important thing is invest for very long term - dividend growth investing set you up for this emotionally which is the key

[@NavShay]

Very good video, I remember a professor of economics said value stocks are cheap for a reason and therefore are riskier than growth stocks.

[@MikeRepluk]

Great video. What's your thoughts on SCHD?

[@morpheus3190]

Capital appreciation of the stock comes into play as well as the true effective yield based on the cost of the stock . If you have been reinvesting the dividends for a long time you need to determine the average cost of the stock at each reinvestment and recalculate the true yield based on average cost. The true effective dividend yield could be much higher than the 3% you mention. Capital appreciation could also increase the overall yield. ( dividend yield in % plus capital appreciation in %= total yield)

[@gilbertyalley2995]

Great content, well informed and researched. Most miss the key component of Total Return. Look forward to the next video 📹

[@Bigpapaseifu]

Thank you for the lesson. I was going to strictly focus on dividends stocks, but that seems now more of an endgame, not the process. Thank you.

[@Daniel-ju3ku]

Thank you for bringing this around to index investing (my personal favorite for average investors).

[@cloudedjourney]

I think one of the big value of dividend stocks is the psychological factor. People like to see that 3 4 5 6% dividend yield as it feels more secure than growth that goes up and down and you can't see. Dividend investors have an easier time continuing to buy and add in up and down markets. It is sooooo slow though. I like it just to help supplement the income in the background rather than use it for any kind of retirement plan.

[@MrKendoex]

1)need high capital 2) risk of inflation 3)taxes, fees, charges 4)dividends are not guaranteed 5)difficulty of picking dividend stocks

[@davidbrooks8809]

6. Dividends are not free it's not extra money it actually lowers the value of that stock😮😅

[@mikewill1740]

It can be done with time and research. It will also require constant mgt. I back out once I mess around and invested into some BDC and MPs by accident. They could get you into some tax problems. I recommend dividend investing for two tiers of ppl. The first group is the very young with +30-40 years until retirement. The second is for those who are already retired, pool their retirement into a dividend strategy within a tax sheltered account.

[@91210paige]

Thanks for the information. No one likes to think about the negatives. However, always take what you read or see on the internet as something you need to investigate and have realistic expectations. I don't want to live off my dividends but I am hoping they will offset any loss I take for retiring a few years early. As for my daughter who is just starting out in life she has that 30 years and after maxing out her 401k I think this is a good option. You did bring up a good point about who is paying these companies that allow you to set this up and don't charge for transactions. There must be an annual cost.

[@callingwind5071]

Thanks for sharing and good job. I think every strategy needs to be executed with the best parameters indeed. I find that on the inflation point you're going to omit the fact that the dividend cagr is important. For JnJ it's more than 5% on average, while inflation should tend towards 2%. The 3% yield is safe when you buy this stock, after which your total yield on this stock through the dividend is much greater over time and therefore higher than inflation, although this economic phenomenon tends to reduce your dividend yields. Secondly, in my opinion, you also need to choose the best currency. This means buying stocks in Switzerland and Liechtenstein that pay dividends in Swiss francs, which have appreciated enormously over time against other currencies. Finally, you can also be resident in Bermuda or Lichtenstein, as they don't tax dividends. What's more, Liechtenstein has much lower inflation due to the Swiss franc on its territory reducing imported inflation and also due to the SNB monetary policy being parsimonious on m2 increases. Then you should do better than you say in your video. What do you think about that ?

[@tyeng1295]

There is no Guarantees with Div stocks but the point is that they’re generally low risk compared with Growth. One step up from Bonds which is why Pension funds invest in them so heavily. You really need to start with a high balance where you protecting your wealth as much as growing it. They also work for people who focus more on reducing their cost base rather than unrealistic Growth

[@kippsguitar6539]

Your statement "lower risk than growth" is often untrue, high dividend stocks are often slashed resulting in a big drop in share price, be very careful in this incorrect assumption

[@tyeng1295]

@@kippsguitar6539 As always it depends what you’re investing in. Dividend shares being ‘slashed’ is likely a 20-30% drawdown…… Last year the majority of Growth stocks were down 70,80 even 90% and will likely never come close to recovering. There is always a risk with anything you invest in.

[@martinrbookermb]

Your right, you need a level head, a balance of growth and divided stocks is a good idea. Most new investors jump in on growth at the wrong time and panic sell when they have a correction. Divided stocks might drop 10-15% unlike growth that drop from 20-80%? It's a good middle ground while earning passive income.

[@MRkriegs]

​@@kippsguitar6539I disagree with u and agree with the original comment

[@PrinciplesPersonalFinance]

This video is brilliant Toby, nice one!! 🙌 Excellent summary of the main issues with dividend investing.

[@TobyNewbatt]

Thanks buddy! Appreciate it :)

[@RedsparInvesting]

Clear video. Indeed most big companies don't pay any or much dividend. That's why i choose companies that at least pay 6% or more

[@mikepaulus4766]

I owned GE in the 1990s and closed my position in GE in 2005. Knowing that they were super steady because they had a large financial services division that was allowing them to make the numbers look however they wanted. I could have ridden the train for 10-14 more years. It's very easy to see what will happen in the future, but you can't really predict the timing.

[@gentleoutdoors]

Im in UK what etfs etc would you recommend for good growth i can look into? I only have VWRL atm only started putting money in it about a year and a half ago

[@Royals_Mindset]

Yes, do your homework & research, then take action. NO RISK = NO REWARD! 💯%

[@mikepaulus4766]

My grandparents built a house in 1960. The monthly payment was $127. My dad said he heard Grandma saying "How are we going to come up with $127 every month?" By the 80s when she made the last payment, being free of that house payment wasn't a big deal in the monthly budget.

[@caracal9458]

It's much easier emotionally to stick with a dividend stock on a downturn as you know you are still getting something back compared to a non-div stock. Personally at my stage I'm buying what I think is underpriced whether they have a div or not. After I get to my freedom number I'll start to look at moving more towards dividend paying so I don't have to sell many stocks and can live off the div

[@wellnesswisdom-vi2sb]

Well you talked me out of investing...good job.

[@TobyNewbatt]

Nice try but you didn’t watch the video if that was your take my friend 😂. Why are people obsessed with dividends?!

[@davidbrooks8809]

😂😢😮😅😊

[@syproful]

To give you an example. In Belgium we get taxed on our income between 45 and 55%. Dividends and any interests are taxed at 30%. If you buy financial products from other nations you also get their tax on top of that. There are exemptions for some nations because of agreements. But they are a burden. One of the few things not taxed here is rent. That’s why buying bricks is the go all in.

[@Andy72668]

Great video Toby very informative & thought provoking as ever well done

[@TobyNewbatt]

Thanks Andy!

[@felixantoniomunozarellano8726]

perfect, ignoring inflation and changes in stock price to your advantage, this is a real serious video gj

[@victor.sanchez.segura]

Such a great video! i really like original content!

[@jordanthomson8675]

You said a stock or company do you analyze a company performance for dividends investment or just gamble and take your chances I personally analyze

[@ericlarkins4816]

Hi Toby, you made a few interesting points. It is true that dividends are not guaranteed, but then again, life isn't either. I heard a lot of information about what not to do and how the dividend snowball is such a huge risk, but what I did not hear is an alternative for what is the better option. When it comes to wealth building and investing, it is a slow process. Unlike get rich quick schemes, wealth building takes time, and my personal opinion is that dividend investing is a great vehicle for that.

[@TobyNewbatt]

Thanks for watching. I did say in the video the solution is stop focussing on dividend stocks you just buy the whole market using low cost index funds. If you need capital you sell stock, don’t let a company force a taxable event on you to decide how much money you can have that in my view is just madness 👍

[@reymondjames1726]

Agree. When the shareprices falls and it will, you'll receive cheaper shares with those divy payments. I am good with that. I love oil stocks but they are volatile. Great dividends though.

[@Nintendo64nerd]

"Just sell when you need it". Except you can't sell forever, eventually you will hit 0 shares. And if you need the money during a downturn in the market then you'll run out pretty fast. Same dumb logic over and over. The 4% rule has been disproven and no one who knows more than a monkey thinks that dividends are free money. All these videos are the same and have the same faulty pretense "people think dividends are free". It's just flat out dishonest to say things like that.

[@Nintendo64nerd]

Taxable event 🤣🤣🤣🤣 more dishonesty. Yeah I'm sure most people in the comments aren't making enough for that

[@quest_edward]

The top corporations typically see their dividends grow at a faster rate than the rate of inflation. In addition, I believe the SCHD (ETF) to be less risky.

[@georgesontag2192]

Dont forget that wall street drops the price of the stock the same amount of the dividend paid. If JNJ was $200 a share and it paid $2.00 dividend, you dont have $202.00, you still have $200 because wall street dropped the price to $198.00. You made nothing with the dividend payment. Buy QQQ and VOO instead. Wall street drops the price so people dont buy the stock and sell after the dividend was paid.

[@george6977]

Young KZbinrs like dividend stocks because stock picking and going on about the dividends they receive each month creates content vs an S&P 500 ETF which doesn't.

[@donsimone8688]

Thanks about comments about inflation. It is making me think.

[@adrianellis2433]

Hi Great as usual. Just a point on dividend snowball. It’s also about the shares you bought at the start and what they are making you today. Using Johnson & Johnson the shares bought in 1995 would have given you 1700% growth and be paying you a dividend today worth 48% that’s dividend snowball.

[@TobyNewbatt]

Defiantly Adrian, I get the yield on cost that if you make the right choice you can end up getting some major returns 👍.

[@sarahhicks3971]

Great video! I have a little “play” portfolio I use to experiment & learn more. Not hit £500 yet, probably next year. 95% of my investments are in my isa in stocks & shares index funds & etf’s. So I keep the dividend portfolio to keep my interest level up.

[@TobyNewbatt]

Thank Sarah and best of luck keep up the good work!

[@hlits6310]

You break it all down into Sound financial advice, and for that I must thank you again

[@TheShorterboy]

it's a tax issue in most places that defines if dividends are attractive or not, capital gain tax is a constant

[@damonnugent56]

Im 24 and invest in 3 different index funds and every now and then i will choose a single stock of a company i like and buy it individually and rarely but some times i will pick out a few penny stocks of company’s that can possibly be big in the future is this a decent way to go about investing.

[@richardwhite1120]

Excellent and thought provoking piece as usual Toby. The most important thing, as you rightly point out, is that there are never any guarantees with stocks or markets. As well as index funds I am also a big fan of Investment Trusts, which have provided excellent returns, and growing dividends for the 30 years I have been buying them.

[@claudiobf]

Why do you need a stock that beats the market? The dividend does not depend on the market value.

[@mahdjoubihammadi4495]

Really great great advice

[@heisenberg2035]

thanks !

[@neilcook1652]

Excellent content, thanks Toby.

[@TobyNewbatt]

Glad you enjoyed it Thanks Neil!!

[@gyldean]

It's good to invest in a country where dividends are not taxed and finding companies with a DY above 6% is so common.

[@livingart2576]

Very well put together and educational as always. Thanks mate. 👍😊

[@TobyNewbatt]

Thanks as always buddy!!

[@livingart2576]

@@TobyNewbatt my pleasure mate, I’m a subscriber for life 👊

[@MACFANTASTICKYPESS]

11:08 where did u get these stats please? How do u know this? Thanks

[@TobyNewbatt]

Koyfin - I used the market screener to filter by total returns and dividends But any tool with data should be able to give you this information. As it’s just facts and not an opinion 👍👍 Hope you enjoyed the video! Thanks for actually watching until later when other people have totally ignored it

[@mentis4046]

Inflation is a problem you will always face. Its not only for dividends and gets offset by growth most of the time. In germany it doesnt really matter if you get taxed for dividends or after sales. So i dont see any reason not to pick some good dividend etf. I will never have to sell and all brokers operating in germany are forced by law to handle taxes for me. If dividends arent enough, you could still sell but at least im not forced to. I forgot to add: Your monthly savings should grow with inflation as well. This is key to offset inflation.

[@BigLazyMexican]

You didn't add SCHD. Out if curiosity where would that end up on the list at 8:52 ? Thank you for the hard truth I truly appreciate it.

[@mtoporovsky]

Is it any desant tool which can do real calculation OF ALL compare math for income?

[@mjcafecrepe6635]

I like your video itsvery insitful. The one metric i also use that wasnt mentioned with dividends is the dividend growth rate does help wth the dividend growth for inflationary reasons. But like u said 1 % is hrd to beat its why i also and recommend to hold 60% in the market 10 percent in bonds 10% cash 20% dividend income or 10% dividend and 10% is u want to take risk for that company that shows great potential and numbers.

[@dominikfrohlich6253]

If you want guarantees buy bonds. Nothing wrong with adding those to a dividend portfolio.

[@ba-ba1193]

Here in Austria, we're taxed 27% on dividends.

[@davidbrooks8809]

😢😮

[@mikecase9365]

Inflation and stocks have a almost built in protection. As the value of dollar decreases the amount collected goes up. Sense most stocks are treated as company value (nav) that value goes up. So does the payout. There are better avenues for protection but there is built in protection

[@TobyNewbatt]

Yes overall if you are talking about the whole stock market investing is a great protection. And I am a huge advocate for investing. What I am talking about in this video is picking stocks specifically because they pay dividends and showing that they are not some magical protection against inflation and how you need to factor in total returns 👍

[@mikecase9365]

@@TobyNewbatt I understood what you were arguing, but paying a dividend or receiving a profit when you sell is is not really different in regards to inflation. Its all protected in theory. If anything why does no one ask how big your snow ball is expected to be and setting your goals accordingly.

[@akshonjackson86]

With the new cash flow ETFs I see this as more probable very easily, I've been able to quadruple my dividend cash flow by switching into these funds as a part of my portfolio, plus i think its the psychological factor of seeing the cash flow come in that motivates me to continue investing, if I waited for growth I'm not as motivated to continue

[@1rocknroy]

I actually can't comprehend at the speed of the speech of this video. If I slow it down it sounds like he is in a mud pit. I think the secret of success of YT videos is to sync up with the listener or vise versa. It's been a long day.

[@gocastleman]

Your major logical flaw is you want to account for inflation to degrade purchasing power but you ignore that the inflation will also result in the stock price appreciating over time. So the 3% dividend will be calculated on the inflating stock price.

[@TobyNewbatt]

Hey buddy. No sorry this just isn’t the case. A dividend does NOT have to go up with inflation nor does a stock HAVE to rise with inflation. Over the long run YES stocks have beaten inflation and this is why I’m a huge advocate of investing and helping people to get started. BUT DIVIDENDS ARE NOT FREE MONEY AND ONLY INVESTING IN STOCKS THAT PAY A DIVIDEND IS A SURE WAY TO LOSE MONEY OVER THE LONG RUN. Most dividend stocks do not beat the market…watch my other video talking about total returns. Many happy returns I hope Santa brings you a great 2024

[@lambrosn]

Hi Toby! what is your preference finally? ETFs or individual stocks for a dividend growth portfolio? love your videos and as many said, finally we are hearing the cons and not only artificial pros

[@TobyNewbatt]

Almost all of my investments are low cost, broad index funds and they are all shared on youtube :). I do have some individual stocks on the side which I do not share. Most people should stick to index funds and focus on growing their income and savings rates is my honest view as they will not beat the market, it's just a fact :)

[@kippsguitar6539]

Impossible to give tips as everyone has a different age and wealth profile but generally but as few ETFs as possible, preferably one! All world.very.low cost (sub 0.2% ter), if you are over 50 consider bonds to stabilise your investment and help you sleep, some bond funds pay 7% pa and more but depending on the risk profile, everything is factored in! My advice for what it's worth it's don't ask for advice but do your own research and understand what you are buying, keep it extremely simple

[@biggstile]

​@@kippsguitar6539Bonds have been horrible in the last few years. People owning them in America have lost huge amounts.

[@FlyingFun.]

need to just have a good balance between growth and income depending on your age, the old thing of taking 100 minus your age gives you the proportion of bonds you need and the rest should be in stocks ideally just indexes is not far off but needs to be a little more weigted to stocks imho, It's actually pretty simple, just gotta ignore the hype and noise and stick to the plan.

[@geraldwilson727]

That's why you pick a small amount of stand alone stocks and use a majority of your investments in index funds and use other methods on top of just simple investing by using options and talking to investment professionals on the difference between standard taxes and qualified dividend taxes

[@sirzee75]

I'm new to investing. Your videos are beyond helpful . Information presented clearly and objectively. Thank you again. Bring on the next one 👍

[@user-ry4xn3bx4l]

This one wasn't

[@ANTHONY1983--]

I started a new bank account for future tax bills from dividends. I'm early in my investing journey so it will be good to be prepared. In New Zealand we can earn $200 NZD a year in dividends tax free

[@Norfolkpaul]

Nice job on your video 😊

[@TobyNewbatt]

Thank you! 😁

[@ericpowell4350]

Great points about inflation. This is why I'm of the opinion that investors should focus on mutual funds (specifically. index funds) focused on dividend growth stocks. Even still, these funds should be a part of a well diversified portfolio of no more than 7 to 11 mutual funds.

[@benshow3000]

Big piece of advice I would give to anyone is don't mess with stocks that only pay "inflation" dividend rates (2-3%)

[@TobyNewbatt]

What kind of dividend rates are good then 5-6%? Does that mean that inflation doesn’t take place and you get great total returns better than the market?

[@benshow3000]

@@TobyNewbatt Anything over 5% I would consider a good dividend paying stock. You can get 5% with zero risk in CDs as of right now. Of course my crystal ball is broken I can't predict the future what will happen then.

[@mohamedhasan6264]

We're taxed 30% on dividends, as a foreign investor outside the US.

[@swordfishK2]

I ditched my dividend portfolio earlier this year when the penny finally dropped.

[@upchuckmcduck]

Finally a breath of reality. Math is math and most of the dividend videos disregard the math.

[@styx814]

You should never rely on dividends alone. Buffett and many other great investors love them but they do not pick stocks for dividends only.

[@kippsguitar6539]

Amazing insight

[@LinuxGalore]

A compounding dividend investment strategy works in Australia because we have something called franking (28% tax already paid). Also, if you hold Australian stocks for more than 12 months ie 366 days, you only pay 50% of the tax on capital gains.

[@TobyNewbatt]

Interesting how different markets work! Thank you for letting me know

[@zakeriaabdi693]

You can work and dividend snowball at the same time, mining companies are also very reliable for dividends and they are highly predictable/low risk because they have reserve estimates and production guidance reports.

[@TobyNewbatt]

I'd have to disagree massively here - mining is incredibly unpredictable it relies on the price of a commodity which is all over the place. You can make a forward prediction all day long but if the price of what they are mining falls, this will affect your overall returns. Way too risky to bet the house on mining stocks, unless you can show me an investor that's beaten the market for the past 20+ years doing this? :)

[@kippsguitar6539]

You have a fundamental lack of understanding of mining stocks, (sorry trying to save you)they are highly volatile, cyclical and have a history of erratic dividends, please be careful, I have been buying them for 25 years when the cycle is favourable and I also worked in the commodity industry, they sometimes smash dividend leading to a huge crash, volatile sector! Check the charts, BlackRock mining Etf is a relatively safe way to play the sector

[@kippsguitar6539]

​@@TobyNewbattobviously correct, highly volatile sector, I have made money in miners, especially today in Rio Tinto,and from may 2020 when they choked supply then Restarted the world but it's cyclical and specialist game, and my background, very unpredictable sector for retail people

[@TerryCollinsP31Lifestyle]

Thanks for this video

[@renzokukengame1684]

True ofc.i invest in ares capital 10% yield,and ofc in peny stocks,no risk no gain.

[@TechWithAdil]

Great video, just subscribed :)

[@TobyNewbatt]

Welcome!

[@user-uk8ol4ev7n]

I have a question and I really really need an answer. Which broker do you use to buy dividends stocks. Please answer my question!!!!!

[@giulianobettiol7658]

XTB is a good one

[@joshua7999]

Yes

[@philiplythgoe7173]

Buy a comp before xd then flog as soon as you can, then buy another comp before xd. VHYL went up today on xd day, i' ll be selling a few tomorrow. Comps don't always drop on xd day...

[@MrGenshinGamer]

Thanks for this video, my KZbin has been spamming me with dividend videos and I was questioning whether to go down that route, I'll stick to s&p / VG lifestrategy for now.

[@TobyNewbatt]

Thank you! As always, find what works for you, investing is a personal thing I just want to make sure people have as much information as possible, nobody knows the future and what prices will do.

[@NoxSicarioInvictus]

If you invested $500 per month in J&J back in 95, then you would have way more than that, considering J&J was around 12.50/share, and now it's 144.50/share. An appreciation of value by around 1100%. Obviously, investing over time you won't get all that, but 4x not impossible.

[@jerrebrasfield4231]

Put bluntly my bank gives me slightly over 1 percent. Compared to dividends which would anyone prefer?

[@licenze2killu927]

Iv been told a lot. To continue to put in for investing. Compounding is good. Reinvesting dividends helps. Watch out for taxes and inflation. But another option I was told was to invest in many ways that way not all your eggs are in one basket. I.e. annuities, CDs, high yeild savings, stocks, precious metals, etc etc. what are your thoughts on this?

[@onebridge7231]

Dividend stocks should only be one leg of the investment portfolio stool. Dividends allow investors to be les emotional and stay the course when markets sell off.

[@BaileyMxX]

Whukst you are correct that buying power in 30 years won't he the sqme as it is today. In the same breath though... The 200 or 500 dollars or whatever you pay in per month will be easier for you to increase as well, eg 400 or 1000 a month... so your results would be greater than you are factoring in right now?

[@TobyNewbatt]

Sure, if you can increase your payments you absolutely should! No other video even mentioned this though that was my point

[@CYBERTRUCK18]

I will forever acknowledge this channel with the help of your lessons and ideas explanation, Now it's quite helpful while you'll just sit at your comfort and monitor your account growth.

[@sweetsweet3753]

hi. nice vid. you didnt mention that diviidend growth can offset inflation over the long term. so if you buy JNJ now at 3% div then in 20 years that may be an equivalent of 7% etc on your initial investment (i just made those numbers up).. i think buying certain etfs (e.g SCHD) are a better way to risk manage a potential dividend trap..

[@TobyNewbatt]

Sure i understand the concept of yield on cost, and your investment now could yield more for sure. But it could also go the other way, dividends are not guaranteed and what really matters is total return. If you are looking to grow your wealth why only use dividend stocks? Makes no sense to me, invest in global index funds and you still own all of the stocks as well as dividends.

[@sweetsweet3753]

@@TobyNewbatt yes agree... my portfolio is about 70% growth / 30% income focused. i am retired (55) but need very little income to survive (i think i am referred to these days as a minimalist lol)

[@BobInGreek]

@@TobyNewbatt you can sell anytime your stocks that do not pay any more devidends and reinvest them somewhere where they pay devidends

[@TobyNewbatt]

@@BobInGreek Sure you can do whatever you want :) You can just jump from one stock to another. Do you know which stocks will pay a dividend, and grow and beat the S&P 500 over the next 20/30 years. Let me know :)

[@BobInGreek]

@@TobyNewbatt you can never know the future. you have to be active to make money and change your investments at the right time, this way u have less risk to lose money