[dot1x]

> getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point

How so? Once you retire, you don't let dividends reinvest. Makes perfect sense.

[Dylan16807]

You should be taking money out at your chosen rate, not depending on how those companies choose to allocate money between dividends vs. buybacks vs. cash piles vs. reinvestment. So treating dividends as reinvested by default makes sense to me.

[metacritic12]

Exactly -- dividends and share buybacks are nearly the same, but the original paper stripped out the first.

[danuker]

Dividends aren't enough to cover living expenses.

If you plan to withdraw 4% per year, so you preserve your wealth indefinitely, you're more than 2 percentage points short when the dividend yield is 1.71% [1]

If you want to live solely from dividends, you'll need more than double the capital.

If you want to die with zero [2], it's impossible.

I'd much rather invest in a dividend-accumulating index fund and sell as I please.

[1] - https://www.multpl.com/s-p-500-dividend-yield

[2] - https://www.goodreads.com/book/show/52950915-die-with-zero

[gkuan]

It may be hard to imagine, but dividend yields were not always this low [1]. Investopedia has it usually something healthy over 4% up until 1990s it seems. Over that 1926- time frame, dividends are said to have contributed 32% of the total return of S&P 500 [2].

[1] https://www.investopedia.com/articles/markets/071616/history...

[2] https://www.spglobal.com/spdji/en/research/article/a-fundame...

[NovemberWhiskey]

You can absolutely die with zero: buy a life annuity and let someone else worry about the problem.

[dot1x]

Seems like you agree returns would be even worse since you'd take out more than the dividend to survive.

[NovemberWhiskey]

Why would you exclude part of the total return on an investment? It'd be like ignoring the principal value of a bond because you expect to live on the coupon. Cashflows are cashflows.

[dot1x]

Because you'd be selling it as you earn it to be able to live on on retirement. In fact, dividends wouldn't even be enough.

[hartator]

> Once you retire, you don't let dividends reinvest. Makes perfect sense.

You don't let interests from bonds reinvest as well then.

[whall6]

There are enough “cash cow” securities that maintain a same / similar share price by distributing heavily for this to make sense. The price wouldn’t show the whole story and the cash could go much further over 100 years than just sitting in a bank account.

I don’t know many people that spend 100 years in retirement.

[danielmarkbruce]

It's not a chart of "how much money does Jonny have".