I love the point you made about assessing management through their ability to allocate capital. It's a very important point that I think a lot of people miss but definitely says a lot about how shareholder focused the management team is. Buffett is the best at this!
There is still 15% dividends tax on dividends paid by USA public companies in your TFSA, but on your Canadian companies you won’t need to pay tax. And the second point in the video about the efficiency of dividends in general is still relevant regardless of the account type you’re using. 🙂
I never understood why people use EBITDA, in there fundA analysis, as if taxes aren’t a expense, maybe not a operating ex, but none the less a expense. Also it depends, i don’t not buy because of divd, but I don’t add it as a criteria, if a business is or isn’t giving them Doesn’t factor as much for me.
Good video I like to hear both sides of story’s but you never mentioned qualified dividends which are only taxed if you make over 40000 or 52000 because of the standard deduction rate. Also knowing when to sell shares to pay regular bills is a headache I think. But you make great points otherwise for longterm 30 plus years.
Great point! I didn't want to get into the nitty gritty of the taxes because I already knew this video was going to be a little too dense for a lot of people and not get the greatest retention but I do appreciate your comment! Good point about selling being a headache. I'm a very reluctant seller! If you're on facebook feel free to join our group: fb.com/groups/intelligentstockinvestors
For real, whoever making less than that in their productive years really need to rethink about their plan. If not, you're asking a LOT from your retirement plan.
Dude, bullseye! To add, I've seen Buffett and Munger use dividend stocks one other way. Because they're so large they've used dividend stocks as a cash substitute. (Source: Munger in a DJCO annual meeting referring to the investment in XOM). I speculate that his recent purchase in VZ is for the same reason.
Good call on the VZ purchase. With VZ having the amount of debt they have as well it's a good way to counteract the forces of inflation from holding cash so it's a perfect cash substitute :)
Thanks for the suggestion bro. I will consider doing this soon. I made a video that is similar to this subject about productive and non-productive assets. My opinion though for you, is NFTs are non-productive assets so they're mostly good for speculating on which is a game I don't want to play. th-cam.com/video/nSTqxID7Hrk/w-d-xo.html
Well I agree that quality of a company is more important than the Dividend. Buuuuuut: 1. Dividend investing is much better in a bear market. The current bull run will have eventually stop, 2. Dividend stocks tend to fall less that non-dividend stocks, this is especially importan if You have a line of credit. Margin call can easilly cut most of Your positions, 3. The market tends to be ineficient with some stocks and the only way to let those returns is dividend investing 4. Dividends eliminate the pressure of selling. According to statistics most stocks at the longrun underperform the market. So a good company may turn bad at some point or the CEO changes (this happened with GE)
Thanks for your comment. Some interesting points. Here's my response: (1) I'm not really fond of the term "dividend investing". Although I do own dividend paying companies, dividends are not on my list of priorities. "Dividend investing" implies it's the only consideration. (2) Regarding you margin call point, I wouldn't advise putting yourself in a situation where a margin call would be possible. If you have $1M invested and you borrow $50K you'll be fine even if the market drops 50%. If you borrow, $800K then you're in trouble and should expect margin calls in your future. (3) I would never argue that the stock market is efficient because I don't believe it is, however I do believe that is is fairly efficient. If you gave an example company I'd be able to address this point better. (4) If a company you own and purchased at a sensible price based on your estimates of it's future prospects fundamentally changes and renders your belief about it's value incorrect a rational investor would need to make a new decision about the company and whether they wish to continue to own it (considering new expectations of value, opportunity costs, taxes you'll pay selling it etc.) and the presence or absence of dividends would, for a completely rational investor, only be relevant in that decision making process the extent that it gives a clue as to the management abilities and understanding of intelligent capital allocation. The Berkshire Hathaway we know today was originally a dying textile manufacturing business. Thanks again for your insightful comment. I appreciate you.
@@IntelligentStockInvesting considering the 1st poin I mean that most of the strategiess are viable and give the best results in a bull market. In a bear market even great financial results don't guarantee growth 2) Well what I meant from margin call is a more or less financial leverege, that can be beneficial in some terms. Option trading is more or less financial leverege and it is commonly used, 3) The inefficiency comes mainly from ETF-s and large funds. When a laarge cap stock falls it is highly probably that most of the companies will fall even despite good earnings. The opposite is also true. In case of the growth let all EV stocks would be an example. I owned Albemarle and sold it because lithium was overproduced and there was a high chance that the financial results will get worse. Now when the tesla rally came, despite low lithium prices the stock skyrocked despite nothing has changed, just the ETF exploded. On the opposite side healt care stocks are now as cheap as never before, and You have companies with very companies that are trading at very low cash flows (BMY, ABBVIE) and You have moderna that has only one drug and it is allmost in the same size. I don't even speak about some china companies that trade bellow enterprise value of 0 ... 4) Well again there are sectors that trade with low multiple with good metrics and are value traps (like for example Biogen that Berkshire invested and sold fortunetly) the total gain from the recent years is allmost 0 due to large stock fluctuation. Another example microsoft when You bought it in 2009 and sold it in 2014 You would make about 0% or even lower due to inflation.
In case of large funds buying I mean low liquidity stocks bought by large funds which enlarge the market capitalization of some companys. This ended poorly for Archegos Capital which exploded last year.
I love the point you made about assessing management through their ability to allocate capital. It's a very important point that I think a lot of people miss but definitely says a lot about how shareholder focused the management team is. Buffett is the best at this!
Yes! It's so key! Berkshire was a dying textile manufacture and it was capital allocation that created what it is today!
Your channel is a gem ! thanks for the great job .
Great job explaining things in all your videos! Thanks keep them coming!
Dude great video! Not just the information, the quality and effects are on amazing!
Thanks so much man! Really appreciate it!!
What if dividend portfolio is inside canadian tfsa
There is still 15% dividends tax on dividends paid by USA public companies in your TFSA, but on your Canadian companies you won’t need to pay tax. And the second point in the video about the efficiency of dividends in general is still relevant regardless of the account type you’re using. 🙂
Good insight
Thanks! 🙏
I never understood why people use EBITDA, in there fundA analysis, as if taxes aren’t a expense, maybe not a operating ex, but none the less a expense. Also it depends, i don’t not buy because of divd, but I don’t add it as a criteria, if a business is or isn’t giving them Doesn’t factor as much for me.
Good video I like to hear both sides of story’s but you never mentioned qualified dividends which are only taxed if you make over 40000 or 52000 because of the standard deduction rate. Also knowing when to sell shares to pay regular bills is a headache I think. But you make great points otherwise for longterm 30 plus years.
Great point! I didn't want to get into the nitty gritty of the taxes because I already knew this video was going to be a little too dense for a lot of people and not get the greatest retention but I do appreciate your comment! Good point about selling being a headache. I'm a very reluctant seller!
If you're on facebook feel free to join our group: fb.com/groups/intelligentstockinvestors
For real, whoever making less than that in their productive years really need to rethink about their plan. If not, you're asking a LOT from your retirement plan.
I prefer buy backs over divs
Me too 100%
Dude, bullseye! To add, I've seen Buffett and Munger use dividend stocks one other way. Because they're so large they've used dividend stocks as a cash substitute. (Source: Munger in a DJCO annual meeting referring to the investment in XOM). I speculate that his recent purchase in VZ is for the same reason.
Good call on the VZ purchase. With VZ having the amount of debt they have as well it's a good way to counteract the forces of inflation from holding cash so it's a perfect cash substitute :)
And taking loans on stocks can be awesome especially if you have a higher yield then inter rate, 😂😂😂😂
If company’s divided yield is growing thats mean we have to think about company growth. But its ok to keep dividend stock as a defensive
For sure, I don't avoid dividend stocks entirely but I prefer to focus on things like returns on capital instead of dividend yield 🙏
@@IntelligentStockInvesting thats great
NFT's are getting very popularity you should also make a video on this topic and share your point of view.
Thanks for the suggestion bro. I will consider doing this soon. I made a video that is similar to this subject about productive and non-productive assets. My opinion though for you, is NFTs are non-productive assets so they're mostly good for speculating on which is a game I don't want to play.
th-cam.com/video/nSTqxID7Hrk/w-d-xo.html
Well I agree that quality of a company is more important than the Dividend. Buuuuuut:
1. Dividend investing is much better in a bear market. The current bull run will have eventually stop,
2. Dividend stocks tend to fall less that non-dividend stocks, this is especially importan if You have a line of credit. Margin call can easilly cut most of Your positions,
3. The market tends to be ineficient with some stocks and the only way to let those returns is dividend investing
4. Dividends eliminate the pressure of selling. According to statistics most stocks at the longrun underperform the market. So a good company may turn bad at some point or the CEO changes (this happened with GE)
Thanks for your comment. Some interesting points. Here's my response:
(1) I'm not really fond of the term "dividend investing". Although I do own dividend paying companies, dividends are not on my list of priorities. "Dividend investing" implies it's the only consideration.
(2) Regarding you margin call point, I wouldn't advise putting yourself in a situation where a margin call would be possible. If you have $1M invested and you borrow $50K you'll be fine even if the market drops 50%. If you borrow, $800K then you're in trouble and should expect margin calls in your future.
(3) I would never argue that the stock market is efficient because I don't believe it is, however I do believe that is is fairly efficient. If you gave an example company I'd be able to address this point better.
(4) If a company you own and purchased at a sensible price based on your estimates of it's future prospects fundamentally changes and renders your belief about it's value incorrect a rational investor would need to make a new decision about the company and whether they wish to continue to own it (considering new expectations of value, opportunity costs, taxes you'll pay selling it etc.) and the presence or absence of dividends would, for a completely rational investor, only be relevant in that decision making process the extent that it gives a clue as to the management abilities and understanding of intelligent capital allocation. The Berkshire Hathaway we know today was originally a dying textile manufacturing business.
Thanks again for your insightful comment. I appreciate you.
@@IntelligentStockInvesting considering the 1st poin I mean that most of the strategiess are viable and give the best results in a bull market. In a bear market even great financial results don't guarantee growth
2) Well what I meant from margin call is a more or less financial leverege, that can be beneficial in some terms. Option trading is more or less financial leverege and it is commonly used,
3) The inefficiency comes mainly from ETF-s and large funds. When a laarge cap stock falls it is highly probably that most of the companies will fall even despite good earnings. The opposite is also true. In case of the growth let all EV stocks would be an example. I owned Albemarle and sold it because lithium was overproduced and there was a high chance that the financial results will get worse. Now when the tesla rally came, despite low lithium prices the stock skyrocked despite nothing has changed, just the ETF exploded. On the opposite side healt care stocks are now as cheap as never before, and You have companies with very companies that are trading at very low cash flows (BMY, ABBVIE) and You have moderna that has only one drug and it is allmost in the same size. I don't even speak about some china companies that trade bellow enterprise value of 0 ...
4) Well again there are sectors that trade with low multiple with good metrics and are value traps (like for example Biogen that Berkshire invested and sold fortunetly) the total gain from the recent years is allmost 0 due to large stock fluctuation. Another example microsoft when You bought it in 2009 and sold it in 2014 You would make about 0% or even lower due to inflation.
In case of large funds buying I mean low liquidity stocks bought by large funds which enlarge the market capitalization of some companys. This ended poorly for Archegos Capital which exploded last year.
@@piotrmaj6706 I think we probably agree on many things. Thanks for watching and commenting I really appreciate it.