I find it interesting that people look at dividends as a means of support and invest in something like the STXDivi or a tracker fund
Has anybody done the maths on this scenario:-
Having funds invested in a typical fixed deposit for a year or 6 months rolling versus funds ex these ETF for dividends. Many companies pay out less than 6% as a dividend and then it is subjected to dividend tax at 15% and normally paid into your trading account with your brokers. The broker probably also charges annual fees which also spreads your costs for maintaining that account across your dividend receipt albeit a small portion.
It could prove more expeditious to invest in a rolling FD rather than being overly concerned about the attractiveness of dividends. Also if over/under 65 in age you get some relief on interest earned via SARS so this needs to be considered when viewed against a dividend chase
Just my views
Not only are you also getting capital growth but dividends generally out strip inflation:
Think of it this way: person lives of the yield 5 years
1)100K in a 6% cash deposit. end of 5 years, guys still getting 6K every year - which because of inflation, is way less than what he started. And his capital is still sitting on R100K
2) Guys has 100K in divi stock, starting at 5% (for this argument/ clear after taxes and its with EQ so no fees) divi grows at 8% per year and porfolio grows at a modest 12%
Capital will be worth R181 and dividend yield will be R7,500 p/y
My mother in law is going with option one...
