Wednesday, October 15, 2014

2012 Dividend Machines versus SDY and VIG

If I were a young man, or woman, I would really consider using a combination of ETF's to save for the future.  Some young people have the time to invest for themselves and others do not.  Some of those who do not have the time use an adviser and do well and others do not.    Advisers are expensive and if you want to save for retirement income I think, as does Ben Stein, that low cost ETF's are the way to go.   

Dividend Machines

Once you get closer to retirement and contemplate replacing your paycheck with investment income,  I would learn how to invest in stocks like Dividend Machines to improve income potential later in life.  This post looks at these three potential investments using my data from 2012.


I am impressed that SDY and VIG, two of the best Dividend Income, low cost exchange traded funds are keeping up with Dividend Machine stocks.

This post presents a comparison of 2012 portfolios.   If you had bought 100 shares of all the stocks profiled in this blog as 2012 Dividend Machines, you would have invested about $213,00.    The results of that effort are presented below.

Also presented in the table below are the results of your investing that same amount of money, $213,000. in SDY and VIG low cost ETF's.   

I want to make it clear that if you look up the performance of these two ETF's the returns will not match the data in the table below.   You see that a mutual or ETF's performance as reported on financial sites assumes you invested the whole $213,000 on day one.    I evaluate performance differently. 

I compare the results of your investing the same amount of money in one of these ETF's that you would have invested in a stock that I profiled. 

For instance, if you bought 100 shares of INTC at $28 you would have invested $2,800.  If you invested that same amount of money and bought VIG at $65 per share instead of the INTC you would have invested $2,800 and bought about 43 shares of VIG.   If it were SDY and the price was $66 your would have bought about 42.42 shares of SDY.

In 2012 at the end of the year you would have owned 100 shares of 48 Dividend Machine stocks, or 3,709.428 shares of VIG or 3,796.901 shares of SDY.   The table below compares how your investment performed using capital gain, yield on current value and yield on basis.

You can see that to grow wealth, all three strategies are similar.  But for income, Dividend Machine stocks remain superior.