GROWTH STOCKS ARE BETTER THAN DIVIDEND STOCKS (If This Is You)

Which is better: Growth investing or dividend investing (value investing)? In my personal situation, there is no comparison. Dividend growth investing always comes out ahead. That said, I get so many questions here about growth investing. Today, I want to share a case, a specific investor persona, where growth investing may be better than dividend investing. Put another way: If I could not invest in dividend stocks anymore (someone told me I just couldn't do it), this is the only way I could see myself being a growth investor.

Today's video starts with an assumption. The assumption is that for anyone to be a grow investor, they must believe that growth stocks will outperform dividend stocks (value stocks) over the long term. Personally, I don't believe that because of the Bank of America / Merrill Lynch study that shows for the 90 years starting 1926 that value stocks have returned 17% per year while growth stocks have returned 12.6%. It's difficult for me to get past this study (link below). However, the modern growth investor must believe that past data is not an indication of the future, and everything is different now in 2018.

Next, the video starts with some goals. I invest for financial freedom and cash flow. Literally, cash that can be used to cover my bills. The growth investing strategy that I'm talking about involves buy and hold for very long periods of time with zero cash flow. As such, this investor must be:
Comfortable working a job (or running their own business) - they will not be able to rely on stocks for income.
Able to buy and hold for very long periods of time such as 20-30 years with no cash flow.
Is comfortable selling equity in retirement to pay for stuff (since, in general, these growth stocks are not anticipated to pay significant dividends).

Given this assumption and these goals, I now dive into some pros and cons of growth investing. And, I show how for this specific investor, growth investing may be better. Why could it be better?
The opportunity for higher returns (that's the assumption, after all).
The opportunity for a more tax advantageous strategy (all money compounds as no dividends are paid out). (That said, it's important to really trust these growth companies not to squander the money that is sitting around.)
The ability to invest in those companies that are disrupting everything. (That said, I do believe that tried-and-true blue chips are underrated on this front. One of my holdings, Pfizer (PFE), just invested $600 million in Pfizer Ventures for the purpose of innovation and disruption.)
The ability to be a risk taker. If you are a risk taker, by nature, growth investing may be more exciting and a better fit that dividend investing (which tends to be a lower risk strategy).
The ability to take on some risk (for higher potential return) during one's younger years. (That said, many young people, like myself, prefer dividends. It all comes down to one's personal situation. And, higher risk does not always mean higher return!)

At the end of the day, there are many strategies out there. And, I've tried a lot of them. Dividend investing is my favorite, by far. That said, I know many subscribers are trying to figure out what's right for them. I hope today's video provides another perspective that may be helpful in your investing journey.

Here's why growth investors are completely wrong about dividend investors:
   • Growth Investors Are Completely Wrong (Abo...  

Here's how taxes work for dividend and growth investors:
   • INVESTING TAXES EXPLAINED: Dividend Vs. Gr...  

Want to learn more about deep value? Here's what deep value investing is all about:
   • STOCK MARKET EXPLAINED: VALUE VS. DEEP VAL...  h

Here's my recent experience with Bitcoin, a growth investment that I profited from:
   • Bitcoin: Taking HUGE Profits Off The Table  

Here's why I love PE Ratio:
   • Dividend Investing: Is PE Ratio The Most I...  

Here's the Bank of America / Merrill Lynch Study referenced in today’s video:
https://finance.yahoo.com/news/baml-9...

Disclosure: I am long Pfizer (ticker PFE). I own this stock in my portfolio.

Disclaimer: I'm not a licensed investment advisor, and today's video is just for entertainment and fun. This video is NOT investment advice. Also, I'm not a tax advisor and today's video is NOT tax advice. Please talk to your licensed investment advisor before making any financial decisions. Please talk to your licensed tax advisor before making any tax decisions.

All content on my YouTube channel is (c) Copyright IJL Productions LLC.