Why Invest in Dividend Growth Stocks?

Published on
June 5th, 2019
Duration
35 minutes

Why Invest in Dividend Growth Stocks?

The Expert View ·
Featuring David Bahnsen

Published on: June 5th, 2019 • Duration: 35 minutes

David Bahnsen, CIO and managing partner at The Bahnsen Group, breaks down his thesis that within the context of equity markets over the past two decades, dividend growth stocks are an attractive investment today and for the next twenty years. Bahnsen discusses his preference for dividends over stock buybacks as a mechanism for corporations to return cash to shareholders, speaks to the difference between dividend growth and high-yield stocks, and provides advice on using dividend growth equity investing to hedge against inflation. Filmed on April 23, 2019 in New York.

Comments

Transcript

  • NI
    Nate I.
    10 June 2019 @ 04:18
    I agree with David for the most part, but I would rather they put the dividend into buybacks for tax efficiency. The problem of course is that crooked managers turn around and increase the amount of stock outstanding by giving themselves lavish pay packages with options, restricted stock, etc. They can't do that with dividends. Therefore, the problem is crooks at the helm and not buybacks versus dividends. Furthermore, if the management is going to pay themselves in excess of tens of $millions of dollar per year, then they darn well better have the skill to allocate free cash to new products or services that will delight customers and grow the company. Typically they don't and that makes dividends better for the owners. Again, dividends are a means to mitigate the problem with having inept clowns or crooks at the helm versus something inherently desirable. In short, I agree with David but not for the reasons he gives. If owners paid attention to what the managers were doing, David's dividend strategy would not work as well as good management reinvesting in the company.
  • DK
    Deepak K.
    8 June 2019 @ 15:06
    Backing the statements with data like charts and numbers will be useful. Didn’t like the presentation style.
  • WB
    William B.
    7 June 2019 @ 03:55
    What about taxes? You never mention them. How about Fang vs your portfolio if I’ve never sold my Fang stocks? You have less volatility which is good thing. Stay away from gold, you cherry picked your start date. Maybe Fang+gold has been better than your portfolio with less volatility.. I won’t cherry pick a start date. I haven’t payed a dime on taxes .
  • TC
    Thomas C.
    6 June 2019 @ 14:22
    Very good. A refreshing counter all the short term trading videos.
  • JH
    Jason H.
    6 June 2019 @ 06:12
    Gold is only touted to be an inflation hedge by people who don't understand gold.
    • NI
      Nate I.
      10 June 2019 @ 04:03
      I disagree. As Simon Mikhailovich correctly points out, one ounce of gold still buys exactly the same number of hot dogs in 2019 as it did in 1919. That is a 100% value store to me. Of course one can always cherry pick periods where supply and demand dynamics skew results one way or the other, but you simply can't beat gold for preserving generational wealth.
    • WM
      Will M.
      11 June 2019 @ 18:43
      Both of you are right. Gold is certainly a proven high inflation hedge but typically not for lower single figure inflation rates. Over time however gold has shown itself to brandy keep in line with inflation trends, albeit it fits and starts. Gold is primarily a crisis hedge over the short term.
  • JS
    Jerad S.
    6 June 2019 @ 05:48
    How is this grounded? The foundation of his argument seems poor. Dividends performed lower than growth stocks for the last two cycles and so the next cycle will be different. He fails to really lay a foundation with this argument other than that is the direction he would like things to go to. To me, his underlying argument is that we are moving from a predominantly debt-fueled creative economy to a more industrial economy with little turnover at the top where cash flow is released to shareholders in dividends. This might come about if the "too big to fail" companies are propped up, and startups are disadvantaged.
  • AB
    Adrian B.
    6 June 2019 @ 05:26
    awesome.
  • WP
    William P.
    6 June 2019 @ 04:35
    Spot on!
  • NR
    Nelson R.
    6 June 2019 @ 03:54
    Bring him back the Trade Ideas series. To pitch dividend growers.
  • PF
    P F.
    6 June 2019 @ 00:34
    This was great, bring him back please!
  • GF
    Gordon F.
    5 June 2019 @ 21:14
    Great presentation! But please voice-over the questions to this and similar presentations so I can just listen to them. With nothing but a talking head, the video has no real advantage over just the audio.
    • M.
      Milton .. | Founder
      6 June 2019 @ 08:09
      Hey Gordon - the audio download features voice over questions 👍
  • RA
    Robert A.
    5 June 2019 @ 18:44
    Great reminder of something we should already know presented succinctly by an excellent guest in a tight Production piece. RV makes it seem easy, but it really is a difficult art form ( even RV has had a few bumps along the road getting to being able to consistently put up wonderful pieces such as this one). Personally, a wonderful reminder on “dividend reinvestment” as a couple of years ago I adjusted all my Dividend Growth Stocks to “cash” because I didn’t want the dividends mindlessly reinvested at ever higher P/E multiples in what has appeared to me to be an overvalued market—after viewing this piece—time to switch back to reinvestment to perhaps take advantage of some better prices ahead. Can’t say RV doesn’t bookend our content—this one so very simple and straight forward and the last one I watched with Mike Green and his guest on Volatility took up ALL of my bandwidth just to try and sort of keep up.
  • SU
    Shakeel U.
    5 June 2019 @ 18:34
    Excellent 😀
  • JH
    Joseph H.
    5 June 2019 @ 16:37
    Good stuff. Still, VIG is at 23.8x's earning, awfully rich for a basket of mature divi payers. If the 10Y sits in the low to mid 2's (thanks for your prescience Lacy Hunt) I gather the trade has legs. An entire nation of retirees and soon to be retired is counting on it.
  • HJ
    Harry J.
    5 June 2019 @ 16:12
    RVTV just paid me a dividend. Thank you! This is information that I can really use everyday. I can buy stuff with this. Good thought process and a clear direction to go. Even if it doesn’t work right away it will in time. Thanks again for information a retail investor can use.
  • TJ
    Terry J.
    5 June 2019 @ 13:41
    Refreshingly different presentation from David, and such reassuringly persuasive arguments for investing in solid stocks that grow their dividends consistently. A classic modern day tortoise and hare investment analogy. I loved his inflation views too. Excellent content. Thank you RV.