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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8881  
Subject: Re: Dividend ETF or Income Investor Date: 1/20/2011 11:32 AM
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Sounds about right.

The one slight advantage the stock picker has over the ETF is our active management. The ETF is dumb it buys and sells as folks buy and sell into it. It is built to achieve average. I don't subscribe to the service but I can easily assume that if I bought the 20 "best" of their current 50 holds and buy nows I would return very near the average of the index/etf.

If one takes the slower road and picks up dividend stocks on sale and slowly builds one's port we can buy higher yields for less money which provides us greater downside protection and higher income. When we get to distribution points dividend reinvesting may not be our best friend, it may be better to have that income distributed and leave as much of our capital in place as possible.

One could "bank" their dividend money in the ETF and as the better picks come along sell SDY for the higher returning individual stock. In the early stages the port will perform like SDY over time it would be possible to outperform.

jack
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