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I would argue that the answer to your question depends on the individual investor.

Given a choice between two stocks, each producing "15%" returns - stock A pays no dividend, stock B pays 5% yield dividend. As such, stock A has an absolute growth of 15%, whereas stock B has growth of 10% (very simplified approach and argument, with many caveats I know).

The problem and consideration becomes how difficult is it to find company A over company B, and the level of effort and analysis necessary to find said stocks.

If, as an investor, one prefers to sit back, not worry about checking up on the company fundamentals and operations too often - in general very hands off - the ETF provides a very strong and positive opportunity for successful investing.

Just like any "company," choose the ETF based on the performance of the fund manager, and watch the expense ratios.

On the other hand, if one is confident in his/her own ability (proven with historical performance) to choose stocks successfully, he/she may want to spend more time finding company A. Certainly one can hope that company A will someday begin paying a dividend, thus increasing the overall return...

Keep in mind that a company paying a dividend does not a good company make. There are all too many examples of companies who take out loans or issue shares just to pay out or increase their dividends. "Mr. Market" has grown to demand this kind of dividend performance, despite its inherent lack of reason. Is this delusion/debt really providing the best return for shareholders?

As for specific stocks, I would not consider an equity simply because it paid a dividend, or consistently increased dividends. This may not always be the best use of shareholder funds... If one likes dividend investing, go with the EFT.

Sorry for the rambling post...

Best regards,
Jon
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