— This is a Jan 2021 self-description of my trading style to a respected fellow investor.
I’m relatively new to stocks, growing my own portfolio and my own system. In my “system”, dividend takes center stage. I think your view is quite common and mainstream. It’s not wrong (though it may not meet my objective).

My objective is dividend as a (relatively) dependable income source, not capital appreciation. (What’s your objective?) If a stock has stable dividends then usually the business is resilient. As I said previously, if I buy at $100 and the price goes $30 to $150 over 3Y, I can afford to ignore the fluctuation to the extent that the dividend amount stays steady. If the actual dividend amount is steady (like $4/Yr, or 4% div yield on cost), then I intend to wait for 25 years to recover my capital. Patience and holding power are keywords in my “system”.

In your comments , I notice a recurring view represented by 正道 . I think many investors think their own “system” is the mainstream (probably yes) and is safe/prudent (??). Following these mainstream “systems”, I am also investing a small amount in ETFs based on sp500 stocks. I also look at each company’s long-term prospect, but not as the centerpiece, because I don’t have time or expertise to evaluate that.

Is dividend investing  正道? I believe it is fairly popular, proven, relatively safe, but less mainstream within my cohort. If you say a focus on dividend is not  正道 then I think thousands, possibly millions, of investors would disagree, esp. in the U.S. There are many articles about using dividend as a major retirement income.

Actually all “systems” I have come across are imperfect and risky. (For low-risk, we would consider government bonds and the money market.)  Within the universe of stock markets, I consider U.S. stocks safer than other regions, blue chips safer than unknown names, long-living companies safer than young stocks, proven profitable companies safer than growth stocks with low P/E.

If I were to use my objective and my safety criteria to judge another person’s system (possibly mainstream system), I might conclude it’s not 正道  not sustainable, perhaps because the realized dividend yield on cost is too low, making it tough to hold the stocks through a downturn. Overall, I feel my own new and evolving “system”, with my focus on dividend, is not mainstream but safer than many mainstream systems. I seldom buy tech stocks or financial stocks (I can name some exceptions). I do agree with the caution that fixation on current div yield can be unwise and regrettable, because some stocks stop paying high dividends after a few quarters, so an initial $100 become $50 in NAV (for many years) + $10 in cumulative dividend. Again, buy-n-hold would become a challenge.

You are right about dividend fluctuations. It’s rare (and precious) to find stocks with steady rising dividends + current dividend yield above 4% . I will name some examples in the future (Perhaps AT&T ? )

Note my 3Y holding period is not applicable to some ETFs.

On Thu, 21 Jan 2021 at 17:11, Bin TAN (Victor) wrote:

You said “big trends are usually only in mid to long-term, where short-term tradings, are usually noises compared to long-term. 抓大放小才是正道”.

I prefer buy-n-hold, hopefully for 3Y or longer, rather than short-term trading. However, I mostly buy for dividend rather than windfall profit. There’s nothing 大 in my approach. I estimate that 90% of my Robinhood assets have a published current dividend yield of 4% – 7% (actually dividend yield on cost is what I care about.)

While you (like other investors) monitor the stocks in your portfolio, I tend to monitor the dividend amounts. If I buy at $100 and the price goes $30 to $150 over 3Y, I can afford to ignore the fluctuation to the extent that the dividend amount stays steady.

Actually, I don’t monitor dividends. Dividend amount fluctuates less than stock price which is determined by supply-n-demand on the market. Dividend amount is decided by management, regardless of stock price.