Bear Bear Craig wrote a post · Oct 23, 2024 13:21

Team Capital Gain 🚀 or Team Dividend? 💰 Which works better?

First we have to understand the difference between both before making a decision which works better. Your choice between capital gains and dividends should align with your financial goals, whether you want long-term growth or steady income. Also, consider the risk appetite that one is willing to undertake.

🚀 Capital Gain: These stocks generally belong to companies that reinvest their profits into expansion, innovation, or acquisitions, resulting in increased share prices. Capital gains are realized when you sell the stock at a price higher than what you paid.

Who’s it for?: Young guns (20s-40s) who’ve got time to take risks, looking for growth and wait for the big payoff.

The Risk: These stocks are like a rollercoaster huge ups but can drop too. Who remembered the short squeeze by $GameStop (GME.US)$ $AMC Entertainment (AMC.US)$ $BlackBerry (BB.US)$ 😂You need patience and nerves of steel. So carefully stocks that you’re in it for long-term gains and don’t need money from your stocks right now such as $Apple (AAPL.US)$ $Microsoft (MSFT.US)$ $Broadcom (AVGO.US)$

Play: You buy stocks from companies that are growing fast and your goal is to sell them later for more than you paid. Example: I bought 1 share of $NVIDIA (NVDA.US)$ at $70. Now it’s worth $140. My capital gain is $70 (100%). Realistically, you would want your stock ROI per year to be above $S&P 500 Index (.SPX.US)$ benchmark (average 8-9%/year) to be considered doing well.

Top strong companies to consider for Capital Gains are: $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Taiwan Semiconductor (TSM.US)$ $Alibaba (BABA.US)$ $Super Micro Computer (SMCI.US)$ $Alphabet-A (GOOGL.US)$ $Alphabet-C (GOOG.US)$ $Meta Platforms (META.US)$ $Advanced Micro Devices (AMD.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $ProShares UltraPro QQQ ETF (TQQQ.US)$ $JPMorgan (JPM.US)$ $Wells Fargo & Co (WFC.US)$

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💰 High Dividend Stocks: These are companies that return a portion of their profits to shareholders regularly in the form of dividends. Investors looking for steady income, particularly retirees or those with a lower risk tolerance, may prefer high dividend stocks.

Who’s it for?: Mid-age (40s-60s) and retirees, especially if you’re thinking about chilling in retirement.

The Risk: Less risky, but slower growth. Great if you want that steady money, but don’t expect the stock to shoot up in value.

Example: $Coca-Cola (KO.US)$ AKA ”dividend king” has payout for 62 consecutive years! $Coca-Cola (KO.US)$ offers dividend yield of 2.7%, and that’s why Uncle Warren Buffett’s company, $Berkshire Hathaway-A (BRK.A.US)$ holds $Coca-Cola (KO.US)$ shares for 36 years and still owns 9.1% of the company. Imagine for every $1million dollar worth of $Coca-Cola (KO.US)$ it would have paid him $27,000/year or $2250/mth without taking excessive risk.

Play: You buy stocks that pay you cash regularly such as $AT&T (T.US)$ $Realty Income (O.US)$ because these companies are solid and not as wild as growth stocks. Perfect for when you want consistent income, like extra cash to spend, without selling your stocks.

Top companies to consider for Dividends are: $AT&T (T.US)$ $Realty Income (O.US)$ $Chevron (CVX.US)$ $Target (TGT.US)$ $AMEX (AMEX.US)$ $Alliance Resource (ARLP.US)$ $Walgreens Boots Alliance(Delisted) (WBA.US)$ $Franklin Resources (BEN.US)$ $Exxon Mobil (XOM.US)$

BOTTOM LINE:

Of course, the question I get most often from the younger crowd would be, where do find my first million?! That’s where the difference comes into play. We first gotta build up our stash during our working years when we’re young (able to ride through various market cycles as compared to retiree whose main objective should be capital preservation).

One good guide that I always practise is to invest minimally 20%-30% of my income into the market regularly. The stocks I buy should be centric on capital gain (with enough time stocks will 2X, 3X even up to 20X).

And as I grow older, i would then slowly choose to diversify some into dividend paying stocks before going fully into the latter during my retirement years; so as to fund my retirement expenses.

There’s no right or wrong, it ultimately should be based on your risk appetite/capacity and goal. Wishing you the best in your investment journey!

Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more

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Space Dust : attempting to play around and buy dividend stock that rise also.
what are your thoughts on Dividend Swing Trading?

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Capital Gains : i shouldnt even have to answer lol

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Powdahound Space Dust : I try to capture the run up. Can be better than the dividend. Especially if you can find stocks that are paying a one time special dividend.

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Bear Bear Craig OP Space Dust : What is Dividend Harvesting and the Dividend Capture Strategy?

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SnowVested : another one.
dividend stock- .US or
.AU /100% franked
as Ozzy, I am seeing a MUCH better out look on Dividend payouts from .US been quarterly over the .AU been half yearly.. but franked means TAX benefits.. sadly it's still so much lower then the American market

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SnowVested : but I came down to comment
'young guns' 20-40 yr Olds. always asking for more

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Bear Bear Craig OP SnowVested : Thanks for sharing! Keep adding in :)

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