The downlow on dividends

As much as we may all love to open a Hatch money market dividend email (1 cent woo-hoo!), those 1c gains would struggle to work while inflation burns at 7.3%. 🔥 Dividends are regular cash payments made by listed companies that share a portion of their profits with shareholders. And because it’s real cash money in shareholders’ pockets, thanks to dividend-paying companies or ETFs, investors may choose to use it as income, or to reinvest it. Cos 1c…

One category of companies who’ve paid dividends for the past 25 years is clustered as the ‘Dividend Aristocrats Index’. Typically, companies in the Dividend Aristocrat Index are mature and have previously maintained steady profits. And to even get their foot in the door of the club, they’ve had to endure 25 years or more of market ups and downs. Another cluster is Real Estate Investments Trusts (REIT). They own buildings, warehouses and land, rented out to people and big companies, like Amazon, DHL and Walmart that need space for servers and stock. 🏘️

The exchange-traded fund (ETF) S&P 500 Dividend Aristocrats Proshares (NOBL) pools dividends from 64 dividend aristocrats in the S&P 500 index, providing investors with diversification. Because if nothing else, volatile markets have shown us that nothing is certain when it comes to investing. 🎢

And while Berkshire Hathaway’s portfolios earn dividends, they don’t pay ’em. Their CEO and chair, investing GOAT Warren Buffet, who famously said, ‘If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes’, also thinks that not all investors want dividends that are taxed as income. He adds that a company's ‘dividend policy should always be clear, consistent and rational. A capricious policy will confuse owners and drive away would-be investors’. 👴