The Dividend Dilemma

The Dividend Cafe

The Dividend Cafe - The Bahnsen Group

Monetary Policy, Dividend Growth Investing, Investing, Wealth Management, Estate Planning, Retirement Planning, Business, Macro Economics

4.9 • 572 Ratings

🗓️ 15 March 2024

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

Today's Post - https://bahnsen.co/3IEE4WR

Dividend growth investing is counter-cultural. It goes against the grain of “hot dots” and “shiny objects.” It functions outside the fads and fashions of the moment. And it insists that ancient ideas like “cash flow matters” are still relevant today (amongst many other ideas). It seeks performance and productivity but not popularity. It flows from a belief system and not a crowd. It is, indeed, counter-cultural.

It also is not always understood correctly. Several misnomers persist that, if better understood, could jeopardize its counter-cultural status. One of my great fears in life is that dividend growth investing recaptures its status as “the known best way to do equity investing.” All things being equal, if dividend growth investing became a consensus understanding of the masses, I still wouldn’t change my belief system one iota, but I prefer running a portfolio at 15.2x forward earnings when the market is trading at 21x … the “non-shininess” of the strategy adds value.

Nevertheless, when it comes to the Dividend Cafe, it is my sworn duty to inform, educate, equip, and edify, so clearing up misnomers is not just allowed but required. If enough people read and adopt the truth, I may have to sacrifice the counter-cultural status of dividend growth, but I’ll know I did the world some good. So today, we shall clear up a couple of things and even dig into some recent history.

And as is always the case with financial markets, the more you understand the past, the better prepared you will be for the future! Jump on into the Dividend Cafe …

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Transcript

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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.
0:12.1	Well, hello and welcome to another edition of the Dividend Cafe.
0:16.2	It is wonderful to be with you to be able to talk about dividends in the dividend cafe.
0:23.0	I'm committed to writing about dividend growth investing a minimum of once a quarter in the
0:28.9	dividend cafe, but I don't even know why I made that commitment because I'm pretty sure I do that
0:33.2	anyways.
0:33.7	And very candidly, I'm writing about dividend growth weekly in ways that you may not
0:40.2	always see. But a more explicit kind of reaffirmation of certain components of dividend growth
0:46.9	on a least a quarterly basis is something I've kind of committed to. And I think it makes a lot of
0:53.0	sense. The particular inspiration today is a desire to talk about a couple objections that may
1:02.4	come up every now and then that allow us to hopefully provide you a little bit of education,
1:09.5	information about some sort of basic accounting terminology
1:14.7	and just a real important conceptual framework for what equity investors are doing and talking
1:21.7	about and how public companies work, some basic components of corporate finance that lead to this discussion around
1:31.2	dividend growth.
1:32.9	And so what I'm going to do is start off by reminding everybody that dividend growth is not
1:43.7	about a company that has profits versus a company that doesn't.
1:48.1	It is about a company with profits that is paying it out to you or a portion, I should say,
1:55.9	a portion of the dividends out to you in the form of a dividend or not.
2:02.5	Now, you could say, well, no, there's other companies that don't make profit.
2:05.9	Well, that's true too.
2:07.7	And that is a little outside of what our general theme is in public market investment.
	...

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