That Dividend Myth

From the book "Your First $1,000,000. Making It In Stocks" by Dr Michael Leong

Dividends give one a false sense of security, as we often associate dividends with guaranteed returns year after year. If I put money in the bank, I willl get interest on the capital and this is almost guaranteed (so long as the bank doesn't go bust, which is a rarity). My original capital will not grow but I am assured of a constant yearly payout.

One should not look at stocks as dividend plays because one's capital is never guaranteed. It could go up as well as down, and against the quantum by which it could move, the dividend payouts would pale in comparsion.

Investing in stocks is risky. We should not think otherwise by using dividend yields to make ourselves feel better.

If you invest in stocks, you are primarily looking for capital appreciation. If there are good dividend yields, this is just sweetener. You should not use sweeteners as the reason to invest in stocks because all stocks go up as well as down.

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Createwealth8888:

Unlike most dividend yield players using their capital I use a basket of pillow stocks to collect dividends so there is no hard earning money at risks at all.

Portfolio Management - Asset Allocation, Diversification, and Rebalancing