Dividend Investing

[Sgt Pepper]

Approaching retirement with the objective of investing to secure a reliable dividend stream is it best to select stocks individually or invest in a Dividend Exchange Traded Fund? Any comments would be gratefully received

[peat]

depends on your skill set really.
The easy way would be the fund.
The hard way (stock selection) may do better - of course it may not, but it may also show more volatility in value due to less diversification.

Why dont you do both with half and see if you can outperform the fund. That'll keep you on your toes.

[percy]

depends on your skill set really.
The easy way would be the fund.
The hard way (stock selection) may do better - of course it may not, but it may also show more volatility in value due to less diversification.

Why dont you do both with half and see if you can outperform the fund. That'll keep you on your toes.

Sage advice.
A friend of mine did this before he retired.
Was pleasantly surprised he out performed the funds.

[alokdhir]

KFL is great investment for retired people . It outperforms market regularly plus give quarterly dividends as PIE income so no need even show in IR3 . Total peace of mind direct credit to bank every 3 months 2% of the NAV . They never missed any dividends ...even last March they paid dividend

[mondograss]

Could also look at Milford Diversified Income managed fund. I had some money in that for a while.

[beetills]

No expert for sure but i am nearing retirement in the weeks ahead and i have invested in the USA markets in REITS.Divies every 3 months and some even pay out monthly.
If you are a REIT by law you must pay out 90% of your profit.

[fungus pudding]

No expert for sure but i am nearing retirement in the weeks ahead and i have invested in the USA markets in REITS.Divies every 3 months and some even pay out monthly.
If you are a REIT by law you must pay out 90% of your profit.

Why not nz reits?

[LaserEyeKiwi]

No expert for sure but i am nearing retirement in the weeks ahead and i have invested in the USA markets in REITS.Divies every 3 months and some even pay out monthly.
If you are a REIT by law you must pay out 90% of your profit.

How are you handling the currency risk? US/NZD currency cross can fluctuate by 30% or more in any year - which would decimate any unhedged portfolio.

[beetills]

I just liked the USA REITS as they were invested in crop farming as well as rental housing.They appealed to me more than commercial buildings.

[SBQ]

I just liked the USA REITS as they were invested in crop farming as well as rental housing.They appealed to me more than commercial buildings.

The IRS tax with-holding would be the primary issue for not choosing REITS in the US. Dividends received in NZ or abroad still are taxed at RWT rates - furthermore FIF on the US REIT holdings for any paper capital gain. However would there be NZ REITS that are 'fully imputed' tax credit on the dividend payouts? This would be far more attractive.

I've never fully understood the NZ obsession for chasing dividends. I much always preferred the Buffet view for allocating income during retirement, which is to sell 'a portion' of the share holding when you need ; and not be triggered with a tax situation when the company issues a dividend. Left over after-tax dividends is a waste. If the wife wants a new car this coming year, or if I want to buy the boat, I simply just sell enough shares at that time to pay for these outgoings - and best of all, the capital gains would be tax free for NZ listed shares. However, once the company pays out all it's retained earnings as dividends, then the book value per share drops and fundamentally, the stock price on the open market will also reflect that by having little or no capital gain (ie. TWG.NZ dividend policy but flat share price for the past 20+ years - hell inflation has made it worse).