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Financing World of Income Investment: High Dividend ETFs and Mutual Funds

2019-04-09 Investing No comment

A few years ago, when the issue was raised at the AAII [American Individual Investors Association] conference in northeastern New Jersey, the professionally directed "Market Cycle Investment Management" [MCIM] portfolio was conducted with several "high dividend option" equity Compare. Exchange traded funds.

  • My answer is: What are the benefits of retirement preparation, 8% of self-sufficient income or 3%? Today's response rate is 7.85% or 1.85%… Of course, there is no similar molecule between the MCIM portfolio and the ETF or mutual fund.

I just chose one of the four "best" high dividend ETFs and a similarly described high dividend mutual fund [more often than I am] "Google." ETFs are "marked" into indices such as the "Dividend Agreer Choice Index" and are primarily composed of large capitalized US companies with a history of periodic dividend growth.

The role of mutual fund managers is to maintain high dividend investment instruments and is expected to trade when market conditions permit; regardless of market conditions, ETFs always own all the securities in their underlying index.

According to the figures published by myself:

  • The average dividend yield of the four "Best 2018" high dividend ETFs [ie, the amount of spending in the checkbook] was suspended to attract 1.75%. Check out: DGRW, DGRO, RDVY and VIG.

  • The same income is not significant, the "best" mutual fund, even after a slightly higher management fee, has generated up to 2.0% of the proceeds. Take a look at these: LBSAX, FFDFX, VHDYX and FSDIX.

Now, really, how can someone hope to live at this income level with a portfolio of less than $5 million. If you do not sell the securities, you will not be able to do so unless the ETF and the fund increase by market value every month, you must enter the principal on a regular basis. What if the market has a long-term decline?

The funds described may be the best in the sense of “total return”, but not from the income they generate, and I have not yet determined how to use the total return or market value to pay the bill. There are no securities sold.

Although I like high-quality dividend-producing stocks [investment-level value stocks are dividend payers], they are not the answer to the “ready” retirement income. These equity proceeds from the production of “dogs” have a better, income-focused alternative; and financial risks are significantly reduced.

  • Please note that the “financial” risk [the possibility of issuing company default payments] is very different from the “market” risk [the market value may be lower than the purchase price].

For an Apple-to-Apple comparison, I chose four equity-focused closed-end funds [CEFs] from a larger universe, which I have been following closely since the 1980s. They [BME, USA, RVT and CSQ] have an average yield of 7.85% and an average of 23 years of payment history. Dozens of others generate more revenue than any ETF or mutual fund mentioned in Google's "best" results.

While I firmly believe that only investing in dividends to pay for stocks, high dividend stocks are still "growth-oriented" investments, and they cannot expect to generate the kind of income that can be obtained from their "revenue purpose" cousins. . But equity-based CEF is very close.

  • When you combine these equity gain monsters with CEF with similar management income purposes, you have a portfolio that can bring in “retirement income preparation”… this is roughly the third to manage the MCIM portfolio content. Divided into two.

In terms of income production, bonds, preferred stocks, notes, loans, mortgages, income real estate, etc. are naturally safer than stocks and have higher returns… as the investment gods expected, if not “walled Wizards Street. They have told you for nearly a decade that yields of around 2% or 3% are the best rate of return they can offer.

They are gnashing their teeth.

This is an example, as recently reported Forbes Magazine Michael Foster's article titled “14 fund squeeze pioneers with a yield of 11.9%”

The article compares the rate of return and the total rate of return, and it is very clear that when the annual income generated by competition increases by 5 or 6 times, the total return is meaningless. Foster compares seven Vanguard mutual funds with 14 closed-end funds… and the winners of each category win: stock market, small-cap stocks, mid-cap stocks, large-cap stocks, dividends, US Growth and American value. His conclusion is:

  • “Talking about yields and one-year returns, No The Vanguard Fund won. Despite their popularity, despite the enthusiasm of passive indexing, Vanguard is a laggard, despite the many stories that people want to believe. "

Hello there! It's time to get your retirement preparedness income plan into a high-speed development phase and no longer worry about total return and market value changes. It's time to put your portfolio in a position where you can make this statement without hesitation and unequivocally, and be confident:

“The stock market volatility and rising interest rates will not have a negative impact on my retirement income; in fact, I am in a perfect position to take advantage of all market and interest rate movements of any size…except for unforeseen urgency In addition, there was no invasion of the principal."

Doesn't it exist? Try this.

*Note: For any specific operation, any reference to safety in this document should not be considered as any form of recommendation: purchase, sale or possession.

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