Charlottesquare wrote:IanTHughes wrote:First of all, with an annuity, the asset value is passed to the annuity provider. With one's own portfolio, the capital is not given away. That is a major difference in my view.
Secondly, all the portfolios under my control where dividends are paid away, have increased in value. You will have to further explain how it is that what was paid to buy the share initially is in part being returned to you by the company when the Market Value of the portfolio increases over time.
Also, for an investor in reliant on a portfolio to provide the cash needed to pay the bills, that cash can only come from Company dividends of Asset sales. Dividends make much more sense than asset sales, especially if the market is low - 2019/2020 30% down due to Economy lockdown - when selling may be a seriously bad move.
I cannot become relaxed about something being called income (dividends) unless it can be shown to be dividends out of current earnings (odd years excepted) I appreciate HYP sets cover as one of its selection criteria at outset but that cover may well change over a lifetime of ownership. (For one thing business models change- ask M & S )
I am sure your investment portfolios have done fine, as you say, but so have mine using a few different approaches over the years (now mainly ITs with portfolio yield at circa 4.6%), the past performance does not negate my view that where dividends paid erode company value in monetary terms or in lack of future investment, thus restricting future earnings growth, they need careful scrutiny.
No-one, let alone I, is suggesting any investment should be made without careful scrutiny!
Enjoy!
Ian