This has strong "1999 daytrader" vibes. Or "2007 house-flipping."

As a newly retired person who really does need to live off my savings, hearing about everybody and their brother piling into the market hoping to avoid having to earn money in the first place by investing makes me think today's market probably is a bubble, and is headed for a fall. But that doesn't mean I have anywhere better or safer to keep the money other than invested. Inflation is certainly a huge risk to cash savings or long-term bonds right now. And please don't tell me Bitcoin.

Why on Earth is anyone comparing the performance of a dividend focused investment versus a Bitcoin meme, moonshot company?

In case the summary misleads anyone: Dividend investing is an absolutely legitimate strategy, indeed it's arguably the original stock investment strategy. The reason people bought shares in companies when the whole concept was invented was primarily to get paid a share of the companies' profits, i.e. dividends. Indeed, the way stocks have long been valued is assuming their price should be equal to the net present value of their future dividend stream (discounted for uncertainty). A few decades ago it became fashionable for companies not to pay dividends and instead re-invest profits in expansion or in stock buybacks, to increase the share price. That's fine, too, the point is that dividend investing isn't a new fad, it's really what stocks were always fundamentally about.

Also, dividend investing has long been a staple of retirement planning... but it's generally a strategy for retirees not people saving for retirement. The benefit of buying good dividend stocks is that you can collect and live on the dividends without selling the stocks, meaning you live on the revenues without reducing your assets, so you don't run out of money before you die.

For that matter, I suppose if young people have enough wealth that they can afford to buy enough dividend-paying shares (or shares in ETFs that invest in dividend-paying companies), then it's a fine strategy for retiring now. It just requires that you already have a few million. If you don't, well, you should invest in whatever will grow your money fastest, and that's "growth" stocks, not "income" stocks.

As an aside, I'll mention that there's also a common One Weird Trick scam [*] related to dividend investing: Dividend capture. The idea is that you buy a stock just before it issues its dividend to capture the dividend, then sell it. Rinse, repeat. Of course, anyone who actually tries this quickly learns that dividends are priced into stocks (net present value of future dividend stream, right?) which means that the share price drops by roughly the amount of the dividend when the dividend is issued, so selling right after the dividend generally means giving up the gain. At the end of the day, and after trading commissions, you're likely to be better off doing the boring thing of buying and holding shares of profitable, well-managed companies.

[*] The scam is that the scammer sells you books / seminars / etc. to teach you how to do this marvelous, clever thing that doesn't work.

If it were a real hustle - effort going into creating value - then call it a hustle.

But this is just another case of people looking for 'something for nothing' and avoiding a real hustle.

It's not that most of us don't share a desire to have an easier life (financially). But, except for a very few, the rest of us have to work. It's dangerous (for society as a whole) if groups of people start to feel like working for a living is 'optional'. What kind of mindset does that create/reflect? You put yourself at a disadvantage compared to those (at home or abroad) who are willing to put in the effort. You'll pay for it eventually...

Whereas capital gains aren't. In a taxable account, you are better off investing in something that doesn't throw a lot of dividends. You'll pay lower tax rates, and get less expensive healthcare, if you aren't already getting it through employment.

Invest into whatever some people recommended. Lose your money slowly and in obscure ways.

The truth is that unless you have a lot of money to invest (10's of millions or more), you will only get bad financial advice. Hence the one thing you can do is become an expert yourself. If you are smart enough, have the education and the intuition. But even then you need luck, real seed-money and the profits will not be that great.

> Speaking to Bloomberg, finance professor Samuel Hartzmark identified this as the "free dividends fallacy," where investors fail to recognize that dividends reduce share prices rather than creating additional wealth.

Leaving aside whether the quote is irrelevant - the implication of TFA is that people are using this as side income because wages are low (though I think, also, the article is bollocks too, people who need the income don't have loose change to spend on shares), this is the "free dividends fallacy fallacy", which relies upon the ludicrous assertion that stocks are valued logically according to some objective criteria.

In a perfect world, yes, a company giving 1% of its income to investors rather than investing it back into itself should reduce its worth... kinda. But the share price of a company is based upon the desirability of the stock. Will the business still exist in ten years? Will it be bigger? Does it have a racist asswipe who spends all day posting memes to a nazi social network as its head? (You'd think that'd kill the company's value, especially if said company only exists due to government subsidies and said company has a recent history of technological failures, but, I'M PROVING MY POINT HERE. You think Tesla would lose any of its share value if it paid a dividend next year? Fuck that, it'd probably go up in value as there'd be a reason to buy it.)

Dividends are also a means for stable businesses that have no obvious direction to grow, but no obvious threats that require a reorganization, to reward investors. That keeps the share price high.

So not only is Hartzmark's comments irrelevant, they're also predicated on the most common fallacy in stock trading - the idea that stocks have an objective value. People who assume that are usually the people who end up holding the bag when an investment goes south.

Dividends are not as tax efficient (at least in Canada) as just investing in a stock and letting it grow over time. Dividends are taxed as income, whereas growth in stocks is taxed more favourably as a capital gain.

Furthermore, there is [1]no rational basis [pwlcapital.com] for choosing a dividend stock over a non-dividend stock.

[1] https://pwlcapital.com/the-irrelevance-of-dividends-still-a-non-starter/

this is not new, and sadly only applies for the small percentage of people who can afford to save for retirement after housing, healthcare, and other costs