QUOTE(dreamxite @ Jul 8 2017, 08:00 AM)
Ultimately, you have to decide your own investment strategy. But from my point of view, since you just graduated, meaning you still have 30-40 years in front of you before you retire, focusing too much on dividend might not be the right thing for you. I say 'might' because I have no idea what's your personal situation.
However, if you plan is to maximize future wealth, focusing too much on dividend can do more harm than good to your long term return. Since your focus is to generate a long term CAGR, focus on return on capital and the quality of the business. ROC is the ultimate long term key driver that decides your long term return not dividend. Dividend is just a byproduct of a management decision.
Not to mention, yes dividend is great, but you have to take into account that those dividend that you receive needs to be invested back into the market, so you have to think about reinvestment opportunity - is there always another good opportunity waiting for you? You have to think about time, how much time you have to spend researching to find the right opportunity, and lastly, the probability of making mistakes because of decision fatigue. These are all opportunity cost.
Thanks for the advice, which I think it's true and I've been focusing more on capital appreciation these days instead of dividend. I study growth company, look at their profit margin, ROE, ROA, leverage ratio all those things. I'm not a risk adverse person, I'm willing to take certain risk and mentally prepared to see my portfolio goes down in bad time. Nevertheless, the end goal is to achieve cagr of 10% in time horizon of 10years. However, if you plan is to maximize future wealth, focusing too much on dividend can do more harm than good to your long term return. Since your focus is to generate a long term CAGR, focus on return on capital and the quality of the business. ROC is the ultimate long term key driver that decides your long term return not dividend. Dividend is just a byproduct of a management decision.
Not to mention, yes dividend is great, but you have to take into account that those dividend that you receive needs to be invested back into the market, so you have to think about reinvestment opportunity - is there always another good opportunity waiting for you? You have to think about time, how much time you have to spend researching to find the right opportunity, and lastly, the probability of making mistakes because of decision fatigue. These are all opportunity cost.
Jul 17 2017, 03:03 PM

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