It's the Income, Stupid!
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 18 November 2022
⏱️ 15 minutes
🧾️ Download transcript
Summary
I actually hate the title this week, because the word “stupid” really is pretty mean. I try not to be mean because I think it is wrong to be mean (I can elaborate if needed). However, in this case, when James Carville famously said, “it’s the economy, stupid,” in the context of what voters cared about in the 1992 election, he basically created a new adage for how we say that a particular thing is really the thing.
And that is the topic of this week’s Dividend Cafe – the thing in dividend growth investing, and clarifying some important terminology and concepts around the thing. And as you shall see today, the thing is growth of income.
Let’s jump into the Dividend Cafe!
Transcript
Click on a timestamp to play from that location
| 0:00.0 | Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.9 | Hello and welcome to the Dividend Cafe. I am excited today to talk to you about something that I think is sort of vocabulary oriented and math oriented, but ultimately investment oriented. |
| 0:26.5 | I want to use the opportunity to clarify what we mean when we talk about certain things as investors and allow you to extract from that an actual investment takeaway and investment understanding |
| 0:39.3 | that I think is at the root of our philosophy of dividend growth investing. |
| 0:44.8 | There's a lot of talk about yield. |
| 0:48.3 | You know, hey, I want to get a higher yield. |
| 0:50.0 | And what do people mean by that? |
| 0:51.6 | Well, yield is, of course, the income and investment is producing |
| 0:57.0 | divided by the value. And so if you put out $100,000 and you're getting $4,000, then you have a 4% |
| 1:05.8 | yield. And yet, if that 4% is still coming and yet the 100,000 could be sold for 200,000, |
| 1:14.1 | now you have a 2% yield, right? |
| 1:16.8 | You're still getting $4,000, but it's now divided by $200,000. |
| 1:22.0 | And so yield is really a very deceiving term because it has efficacy or relevance or import at the point of a purchase, |
| 1:32.4 | and it could be a factor at the point of a sale, but it is a descriptive term that is simply a byproduct of math. |
| 1:40.7 | It's an equation. It is an income divided by a current value. And so when someone says, |
| 1:48.2 | oh, the yield is going down, do they mean the math of my income divided by my investment? |
| 1:57.6 | Or do they mean the income is going down? If they mean the income is going down, |
| 2:03.8 | they could have a problem with the investment. And if it were the way we invest money, it would |
| 2:08.6 | be a problem because we are investing for growing income, not declining income. And so if |
| 2:14.4 | they're simply using the wrong term, that's one problem. |
| 2:18.9 | Then we just have to correct nomenclature, correct vocabulary. |
| 2:23.5 | No, the yields, the income's not going down. |
... |
Please login to see the full transcript.
Disclaimer: The podcast and artwork embedded on this page are from The Dividend Cafe - The Bahnsen Group, and are the property of its owner and not affiliated with or endorsed by Tapesearch.
Generated transcripts are the property of The Dividend Cafe - The Bahnsen Group and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.
Copyright © Tapesearch 2026.