Why Dividend Growth Wide Moats vs No Dividend Wide Moats?

By Anita Martinz from Klagenfurt, Austria [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Sleep per Day: (Target) 7h30m / day (Actual) 7h28m / day (82 day average)

It’s surely not because Dividend Growth Wide Moats is a definitely more profitable strategy than No Dividend Wide Moats.

Arguably I could make much more money with a No Dividend Wide Moat stock since as a non-US citizen I don’t have to pay capital gains tax. No capital gains tax and no dividends (thus no dividends tax) actually makes a No Dividend Wide Moat strategy extremely tax efficient for me.

But barring the fact I need to pay 30% withholding dividend tax as a non-US citizen, I choose Dividend Growth Wide Moats because it suits my temperament.

I really like the concept of margin of safety, so if the returns make sense solely from a dividends’ point of view even after taking taxes into consideration, I can get a decent return without having to rely on the markets being efficient. After all, “The market can stay irrational longer than you can stay solvent.

Expanding on the concept of margin of safety, since using a Gordon Growth model is an extremely conservative way to value a business, if it makes sense to invest even when taking a discounted growth rate and the dividend tax rate into consideration, you leave little room for reality to be worse than what you value, which theoretically should generate higher returns for you.

Also I like the idea of being able to steadily measure progress. To be able to see your dividends grow at a steadily increasing rate is extremely motivating, which will allow me to have the motivation to stay the course even when the markets keep crashing or stay in a bear market.


Not advice. No offer. Do not rely. May lose value. Risky. Conflicts hidden/obscured. (Borrowed from Terrence Yang‘s Disclaimer on Quora)



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