I’ve talked about this quite a bit on social media and on the podcasts, but I wanted to provide this reminder.
I see it very frequently — people touting high dividend yields, especially in the FIRE community.
For me, high dividend yields are something that I’m more scared by than I am excited by.
Are there exceptions? Of course, there are, as there are with anything, but in general, this holds true.
I generally do not look to the stock market for cash flow, other than a few minor options strategies I use. If I want cash flow, I invest in cash-flowing real estate. If I want appreciation, I invest in the stock market.
This isn’t the right strategy for everyone, but it’s what works for me, and helps me decide on my portfolio allocation.
Whether it’s right for you or not, I encourage you to fully understand why a dividend yield is so high.
There are no free lunches.
All the best,
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High Dividend Yields Scare Me, Not Excite Me
Absolute agreement. In real estates (at least in UK), high yields can you in not good areas (declining industry), with not so great tenants, also the headache of resale.