As an aside, I too am interested in more international exposure but would prefer to invest in individual companies. If you stumble on any interesting non-US companies in your research a post in that area would be appreciated.

Thanks,
Bootstrap

>do you think dividend investors might be
>particularly susceptible to be lulled into
>a false sense of security?

If they were, this market should have cured it.

>when evaluating competing investments
>particularly for a long term holding,
>wouldn’t the investment with the best total
>return be the best place for your money

Over time, dividend stocks have done quite well compared to the market as a whole. More on this in Wednesday’s post.

>income stocks that you write about, why
>is that?

Most of my other holdings are mutual funds, ETFs and CEFs. I am currently researching international (emerging markets) funds to increase my exposure in that area – I find it dreadfully boring. I much prefer to research an individual company and understand its persona. Here is you a link to a non-income post:

http://dividendsvalue.com/1168/is-it-time-to-upgrade-your-portfolio/

BTW, this fund has been dreadful up to this point.

Best Wishes,
D4L

Thanks for the response. I must admit, I like your post title “The Dark Side of Dividends” I didn’t realize that your dividend portfolio was a portion of your overall total. I take your point on investors being able to be lazy with just about any strategy, but since you blog on the topic – do you think dividend investors might be particularly susceptible to be lulled into a false sense of security?

I take your point with capital gains, but like you said, one can be lazy with any strategy. I was just pointing out when evaluating competing investments particularly for a long term holding, wouldn’t the investment with the best total return be the best place for your money, regardless of dividend status? Also, I simplify somewhat, clearly you would want to convert your gains into income producing investments over time to avoid any market timing impacts.

I guess another way to phrase the question – you mention that your portfolio has only a portion of income stocks that you write about, why is that? I’d be interested in understanding that – maybe in a future post.

Thanks – I enjoy your blog,
Bootstrap

Bootstrap: Dividend investing is only one part of my total portfolio. I find it the most interesting, so it is the one I blog about. Occasionally, I will touch on some of my other holdings, but I generally avoid it. Here is a link to a

Not to one up you, but last June I posted “The Dark Side of Dividends” in which I listed 5 reasons for not paying a dividend. Some were the same you listed in your post.

As for your post, we can agree on #3. I am not a DRIP fan. I accumulate dividends over a month, then invest them in whatever stock is the best value and fits my asset allocation. I am not sure I understand your #4. I evaluate every company that i own at least quarterly. An investor can be lazy using any type of investment strategy. Numbers 2 and 1, I addressed in the post above.

One other point, if you totally rely on capital gains, you better time your retirement well. Secular bear markets can sometime last a decade. If you retire at the beginning of of one, you will quickly eat through your nest egg.

Best Wishes,
D4L