Why I am an income investor
Individual investors love dividends. Many academics and financial professionals are not so enamored. It is important to explore the source of this difference of opinion no matter which camp you fall in. Considering different opinions provides perspective and can improve results by challenging assumptions.
Detractors of income investing have the following critiques:
- Total returns should be the primary focus of investors
- Dividends are inherently inefficient from a tax perspective
- Paying dividends reduces earnings growth
- Income strategies require investors to actively manage their portfolios
Critique one: Total returns should be the primary focus of investors
Total returns combine returns received from dividends and capital gains which is the…
