The End Game of Dividend Investing: The Zero Hour Work Week

Even though I spend a lot of my time thinking about and writing about dividend-focused strategies, I’m definitely not opposed to strategies that involve focusing on profit growth in general without much consideration of the dividend. How can I criticize people who have been holding Berkshire stock for 30+ years? They are more financially successful now than I will ever be. I don’t want to throw stones at people who are better than I am at investing.

But I do think there is an appeal in having cash come your way on a regular basis, organically through the profit sharing structure of dividends at the high-grade American companies. If you accumulate 25,000 shares of Philip Morris International, you are going to collect $94,000 in dividends (plus you pay taxes). That creates options for you–without working, you get to live on the salary of the average American household (low $50k’s) and you get $20,000+ coming your way each year to fund new investments. If you want to spend your life being a capital allocator, it seems to me that income investing is the way to go.

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Forgiving General Electric’s Dividend Cut And Lofty Executive Compensation

The funny thing about GE’s dividend cut during the financial crisis is that it actually freed up capital to allow General Electric to recover faster and stronger than it would have if the $0.30 quarterly payout had to be maintained. Additionally, it is the presence of a high-quality executive base (that happens to get paid very well) that is largely responsible for being able to grow profits 8-12% annually despite being a monolith that brings in $146 billion in revenues. We’re talking about lightbulbs, water processing, and engine construction here. This isn’t like Coca-Cola where you can just twiddle your thumb and the annual growth happens automatically due to the ubiquity and brand equity of the product.

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