Beware juicy yields and ETF expense ratios
Wall Street Breakfast
Seeking Alpha
4.1 • 1K Ratings
🗓️ 18 November 2024
⏱️ 8 minutes
🧾️ Download transcript
Summary
Ryne Williams warns of juicy yield traps and advises looking at dividend history (0:49). How the macro picture affects price movements, especially in REITs (2:15). Dividend Growth Investing, meanwhile, shares why he prefers dividend ETFs like SCHD and DGRO (4:05).
Episode transcripts: seekingalpha.com/wsb
Show links:
Ryne Williams YouTube channel
Dividend Growth Investing YouTube channel
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Transcript
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| 0:00.0 | lot of talk these days about what stocks belong in your portfolio. In Kim's absence this week, |
| 0:06.5 | instead of your typical Wall Street lunch, we're going to give you two conversations that we |
| 0:11.4 | had recently on our investing experts podcast, one with Ryan Williams and one with dividend growth |
| 0:17.7 | investing. Both of those investors focus on the dividend stocks, and we get |
| 0:24.0 | into why those may make sense for investors, not just at this time, but maybe all time. Enjoy the |
| 0:31.8 | conversations. Let us know what you think. There's a type of dividend stocker ETF that we talk about called yield traps. |
| 0:48.3 | And essentially, I mean, these yield traps are exactly what they sound like. |
| 0:51.2 | They're companies or ETFs that come with high starting yields. |
| 0:54.8 | Typically, it's 11, 12, 15, sometimes even higher percentages, but very juicy and very tempting |
| 1:02.7 | dividend yields. |
| 1:03.6 | But you've got to look beyond just the dividend yield. |
| 1:06.5 | And that's where you've got to look at the dividend history. |
| 1:08.6 | And so these yield traps, while they may have these high starting yields, and I'll give you |
| 1:12.0 | some concrete examples in a moment, if you look at the dividend history on these companies or |
| 1:15.9 | ETFs, the dividend per share is going down over time. |
| 1:19.8 | So if you hop on seeking alpha, search AGNC or search ORC, that's Orchid Island Capital |
| 1:25.7 | or AGNC Investment Corp, look at the dividend history on |
| 1:28.7 | those and you'll know what I'm talking about. Over time, if you look at the last 10 years, |
| 1:33.6 | the dividend per share is, I think in both of their cases, has been cut in more than half. So yeah, |
| 1:39.5 | you might have a high starting yield and 10 years ago you might have had a high starting yield, |
| 1:43.0 | but over time, your cash flow returns with those companies are going down and those |
| 1:47.5 | are the exact opposite types of things that you want to invest in you want to see that going up |
... |
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