Part 6. The DIV Dividend Strategy
The last of the seven AVI strategies is DIV (the dividend strategy). Its goal is not maximum capital growth, but a stable and gradually increasing cash flow.
In this sense, the portfolio can be viewed as analogous to "stock-bonds": regular payouts grow over time and partially offset inflation.
This strategy may be useful for investors who value:
- stable cash flow
- growth in payouts over time
- less dependence on market fluctuations
It should be noted that dividends are subject to taxation. In some jurisdictions, the tax burden can be substantial. A similar situation arises when investing in bonds.
At present, the DIV strategy is the only one of the tracked AVI strategies that underperforms the S&P 500 index in terms of return. This is to be expected, as the strategy’s priority is the stability of payouts, not maximum capital growth.
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