Should Dividend Investing Be Considered Active Investing?

By: ispeculatornew
Date posted: 01.22.2014 (3:00 am) | Write a Comment  (0 Comments)

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dvdI don’t know if it’s just me, but when I hear all about the debate between active and passive investing, I usually hear about the fact that the vast majority of investors end up falling short of beating the overall market. That mostly concerns investors that are either stock picking or paying someone (fund manager) to do so for them. The fact is that the vast majority of them lose. None of this is news I’m certain.

Then, those investors will go in one of 2 directions:

-Build a coach potato/index based strategy that relies on low cost funds (ETF’s generally)
-Build a dividend portfolio that is highly diversified (such as the USDP that I’ve built)

I certainly believe in both strategies and they are the core of my retirement savings. I also do some stock picking (long & short trades, long term speculative picks, etc) but most of my savings are in the safer, less volatile dividend & index strategies.

If You Don’t Believe In Active Investing, Dividend Investing Is Not For You

I’ve gotten into a few arguments about this over the years. Dividend investing IS active investing. Unless you’re following some kind of index, you are making decisions about which stocks to hold, which ones to ignore, etc. That is exactly what you’d call active investing.

“But Dividend Investing Has Done Incredibly Well Over The Years”

Yes, that is absolutely true. Dividend stocks generally perform well and will outperform the overall market in certain conditions which can last for a few years and sometimes much longer. That does not make it less active.

I’m Not Saying It’s Wrong

As I said, I’m a believer in this type of investing and I do think that in general dividend investors do have more rules around their trading & investing which helps out a great deal, especially over longer periods of time.

Do You Consider Dividend Investing To Be Actively Managed Investing?

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