Chasing dividends isn’t the panacea

Many investors seem to look at companies which don’t pay dividends with disdain.

Sometimes, we hear about investors being categorised as either ‘growth’ or ‘value’.

I focus on total return. I’m not bothered by the combination how the desired return is achieved.

The chart below shows Microsoft’s (MSFT) 648% capital return over the past 8 years compared to Commonwealth Bank of Australia’s (CBA) 27%.

To be fair, if you add CBA’s dividend back into the equation, the total return 74%.

Holding a blind love for companies which pay dividends isn’t all that it’s cracked up to be.

April 21, 2021

by Rob Zdravevski

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