The “Dividend Dilemma"
Become more than just a dividend investor.
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Tweet of the Week
Weekly Market Update 🗒️💡
Indexes
The Dow Jones ended the week 2.2% lower, marking its worst week since March 2023.
The S&P also fell 2.1%, registering a 3rd straight week of losses which we haven’t seen since February.
The Nasdaq saw a 2.6% decline also falling for a 3rd consecutive week, which we haven’t seen since last December.
The indexes are experiencing economic growth, but there are large question marks about how high interest rates need to go.
As the 3 indexes continue to fall, I continue to buy. Last week alone I invested over $1,000 into the S&P.
Are you buying?
Bonds
The new kid on the block? Short-term bonds.
Interest rates are causing tons of uncertainty for investors, so many of them are dumping their money into short-term bonds to guarantee a return while things settle down and they get a clearer picture of where rates will go.
According to FactSet, the iShares 0-3 Month Treasury Bond ETF (SGOV) has pulled in more than $500 million of net inflows over the past week, but still trading flat month to date.
The iShares 20+ Year Treasury Bond ETF (TLT) has fallen this month, with investors pulling out ~$1.8 billion in August.
Are you buying short-term bonds? Personally, I don’t.
Dividends
With short-term bonds being the new talk of the town, you might think that’s a good place to park your money. But hold on there cowboy!
Dividend-paying stocks still offer an attractive option for investors, even though Bonds are paying high yields.
What’s the difference?
Well, dividend stocks grow their dividends, whereas Bonds offer one fixed rate and that’s all you get.
If you have a stock that yields 3% and grows its dividend by 10%, after 5 years you could be a lot better off than someone who held a Bond paying 4%.
Remember: dividend growth + share price growth is the best combo for wealth.
A tough month for earnings
Stocks reporting earnings this month have been struggling. Just under 1,200 companies have reported earnings in August and the average post-earnings reaction to their stocks have seen an ~1% decline.
It hasn’t all been cloudy skies though.
Of the nearly 95% of S&P 500 companies that have reported earnings this quarter, 4 out of 5 have beat Wall Street expectations.
Great news for all investors.
The Dividend Dilemma
Remember that seemingly stable investment strategy everyone talks about?
You know...
The one that promises a steady income flow?
Well, let me share some insights about it.
Let's call it “The Dividend Dilemma”.
It's like relying on that quiet friend from high school who always kept to themselves.
Let's call that friend Sarah.
Now, Sarah…
Didn't chase risky investments.
Didn't aim for the highest returns.
Didn't dive into flashy trends.
She only wanted a dependable source of income besides her real estate properties.
And she LOVED dividend investing.
So she diligently put her money into dividend-paying stocks, drawn by their consistent payouts.
Sarah focused on those dividends, just like she focused on her real estate research.
As the dividend income rolled in, Sarah found comfort in her investments, much like the rental income from her properties.
But Sarah realized she can accelerate her journey to financial freedom by learning that…