{"id":3169,"date":"2021-11-13T23:56:00","date_gmt":"2021-11-13T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=3169"},"modified":"2025-11-13T11:51:46","modified_gmt":"2025-11-13T03:51:46","slug":"dividends-investor","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/","title":{"rendered":"Prudent considerations as a dividends investor"},"content":{"rendered":"\n<p>Remind dividends investor who take dividends as the starting point for their investment, whether it is US stocks or Taiwan stocks; if you incline to dividends investing or you are an elderly retiree, many of the biggest risks of dividend investors must be paid attention to. Let discuss below.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Stock_has_limited_upside_potential\" >Stock has limited upside potential<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Inflation_and_interest_rates\" >Inflation and interest rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Tax\" >Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Dividends_is_an_uncertain_income\" >Dividends is an uncertain income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Stock_price_highly_linked_to_dividend_policy\" >Stock price highly linked to dividend policy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Is_dividend-based_investment_bad\" >Is dividend-based investment bad?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Where_to_Find_High_Dividend_Companies\" >Where to Find High Dividend Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Stock_has_limited_upside_potential\"><\/span><strong>Stock has limited upside potential <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Don\u2019t fall into the woods &#8212; Many companies that distribute dividends are listed companies whose business will not grow significantly; this means that the stock price will no longer grow significantly in the future; your principal may be eaten up danger.  Even if you buy the few semiconductor stocks that I mentioned that will distribute dividends, on average, their stock price upside potential are relatively poor, and they may be lower than the market. The worst scenario will be you will be fortunate if the principal is still there.<\/p>\n\n\n\n<p>I took Coca-Cola as an example before. This is a very good example. Taiwan\u2019s China Steel&nbsp;is also an example, and China Steel, strictly speaking, is in an industry that is far more disadvantaged than Coca-Cola. Moreover, Taiwan&#8217;s national conditions and overall industrial structure, industrial benefits and profits are really not suitable for steelmaking in the long term. For details, please refer to my other blog post &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/02\/coca-cola-has-been-inferior-to-pepsi-in-and-even-return-rate-is-negative-in-past-10-years\/\">Coca-Cola has been inferior to Pepsi in and even return rate is negative in past 10 years!<\/a>&#8220;.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Inflation_and_interest_rates\"><\/span><strong>Inflation and interest rates <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The importance of inflation and interest rates cannot be overemphasized. Most people underestimate the lethality of inflation and interest rates on everyone \u2500\u2500\u2500Let\u2019s say that they can pay for stocks that exceed the rate of inflation plus interest rate increase every year. Not very few, but extremely rare! Investors must face up to the pressure of rising prices (purchasing power, this is the most important thing). Dividends investor rely solely on dividends to sustain their lives should be caucious to your dividends investing. Readers who are interested in this topic can refer to my previous article &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/29\/the-most-two-serious-killers-to-investors-inflation-and-interest-rate\/\">Tax, inflation and rate are the top three serious killers to investors<\/a>&#8220;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Tax\"><\/span><strong>Tax<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There is a so-called rich person in Taiwan that sells stocks during the period when dividends are paid, and then buys back stocks after ex-dividends, in order to avoid a large amount of taxation. This is a rare phenomenon in the world. There is no reason for it, just because of tax law revisions &#8212; dividends have been incorporated into comprehensive income.<\/p>\n\n\n\n<p>Even if you are a U.S. taxpayer buying U.S. stocks, dividend income should be taxed at the capital gains rate or the higher ordinary income tax rate. In contrast, unless you sell and realize gains, you do not need to pay taxes on stock price appreciation. This is the reason why U.S. stock companies do not like dividends and switch to stock repurchase; see my other article &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/22\/why-do-more-and-more-u-s-technology-stock-companies-tend-not-to-pay-dividends\/\">Why do more  U.S. technology stock companies tend not to pay dividends?<\/a>&#8221; for details.<\/p>\n\n\n\n<p>If you are a U.S. taxpayer, please make good use of your 401(K) account, because you use 401(K) to purchase shares. Dividend taxes are deferred in your 401(k) and traditional IRA, and are tax-exempt in the Roth IRA.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Dividends_is_an_uncertain_income\"><\/span><strong>Dividends is an uncertain income<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies do not guarantee that dividends will not be interrupted, and they continue to increase dividends in line with inflation. In the history of U.S. stocks, there are only &#8220;extremely rare few&#8221; companies (for the full list, please see my book &#8220;The Rules of Super Growth Stocks Investing&#8221;, sections 5-6) maintain such records. Most of them will be interrupted, mainly because of the limited lifespan of listed companies. Another reason is that business encounters difficulties, leading to business difficulties, and must be cut to maintain cash flow.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Stock_price_highly_linked_to_dividend_policy\"><\/span><strong>Stock price highly linked to dividend policy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The stock price of a listed company that pays dividends will almost always be highly linked to the company\u2019s dividend policy &#8212; increasing dividends, reducing dividends, suspending dividends, starting to pay dividends, and resuming dividends; any of them will immediately affect the company\u2019s stock price . For example, when <a href=\"https:\/\/www.cnbc.com\/2018\/12\/07\/ge-makes-it-official-lowers-dividend-to-a-penny.html\" target=\"_blank\" rel=\"noreferrer noopener\">General Electric (ticker: GE) cut its dividend in 2018<\/a>, its stock price fell from approximately US$78 to US$51.54 in six weeks, a 34% drop.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Is_dividend-based_investment_bad\"><\/span><strong>Is dividend-based investment bad?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The dividend-based investment method is not bad, because each investor&#8217;s situation, needs, financial status, and age have different considerations&#8211;Financial institutions, non-profit organizations, retired people, people without  paying jobs, or any investors who need rapid liquidity of assets are very suitable to adopt dividend-based investment methods. I have repeatedly emphasized that there is no such thing as &#8220;sure&#8221; or &#8220;definite&#8221; on the road of investment. <\/p>\n\n\n\n<p>Only if it is suitable for you, and the investment method that suits you, will you have the enthusiasm for investment and will automatically form habits. Forcibly applying other investment methods and adopting methods that are hard for oneself to agree with will not last long. Only by finding an investment method that suits you can you be successful in a long-term, long-term investment and long-term flow. All my central ideas are the same.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"156\" height=\"101\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/09\/Flickr-1600x1200-4.jpg\" alt=\"dividends investor\" class=\"wp-image-13965\"\/><figcaption class=\"wp-element-caption\">credit: Flickr<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Where_to_Find_High_Dividend_Companies\"><\/span>Where to Find High Dividend Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you invest with dividends as the starting point, I recommend you to refer to my other article &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/10\/08\/dividend-rich-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Dividend-rich industries and 6 big differences from Taiwan<\/a>&#8221; for details.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/12\/50-longest-dividend-payouts\/\">50 longest dividend payouts companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/\">Prudent considerations as a dividends investor<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/07\/08\/buffetts-dividend\/\">87% of Buffett&#8217;s dividends come from these 7 stocks&#8221;<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/10\/08\/dividend-rich-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Dividend-rich industries and 6 big differences from Taiwan<\/a>&#8221; <\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/08\/05\/5-high-yield-etfs-in-taiwan\/\">5 high-yield ETFs in Taiwan, irreversible trends, and how much do Taiwanese like it?<\/a>&#8220;<\/li>\n\n\n\n<li> &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/22\/why-do-more-and-more-u-s-technology-stock-companies-tend-not-to-pay-dividends\/\">Why dividends disappeared suddenly these years?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/13\/dividends-investor\/\" target=\"_blank\" rel=\"noreferrer noopener\">Considerations as a dividends investor<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/29\/the-most-two-serious-killers-to-investors-inflation-and-interest-rate\/\">Tax, inflation and rate are the top three serious killers to investors<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/02\/coca-cola-has-been-inferior-to-pepsi-in-and-even-return-rate-is-negative-in-past-10-years\/\">Coca-Cola has been inferior to Pepsi in and even return rate is negative in past 10 years!<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/11\/22\/texas-instruments-bio\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Texas Instruments make money? Amazing long term capital reward and company net profit margin!<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Considerations as a dividends investor. Remind investors who take dividends as the starting point for their investment, whether it is US stocks or Taiwan stocks; if you incline to dividends investing or you are an elderly retiree, many of the biggest risks of dividend investors must be paid attention to. Let discuss below.<\/p>\n","protected":false},"author":1,"featured_media":13965,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[163,561,405,407,164,779,23,28],"tags":[369],"class_list":["post-3169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-dividend","category-income-tax","category-inflation","category-interest-rate","category-repurchase","category-risks","category-taiwan-stock-market","category-us-stock-market","tag-ge"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=3169"}],"version-history":[{"count":29,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3169\/revisions"}],"predecessor-version":[{"id":39938,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3169\/revisions\/39938"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/13965"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=3169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=3169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=3169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}