Dividend Investing: Busting Myths and Understanding Risks with Mark McGrath

Is 'free money' too good to be true? Allow us to clarify the often misunderstood world of dividend investing with my guest, Mark McGrath, a financial planner and investment advisor at PWL Capital. We're here to debunk the myth that dividends are 'free money' and to provide an understanding of their distribution and impact on a company's share price.

Mark clarifies the specifics of how dividends work but adds points of caution, advising against the trap of focusing on dividends and dividend yields alone, particularly when preparing for retirement. His expert perspective brings light to the often-quoted concept of yield on cost and the risks it poses through over-concentration.

Finally, we delve into the all-important topic of diversification and the inherent risks of investing in dividend stocks. With Mark's guidance, we explore the concept of sequence of returns risk and its potential implications during turbulent market periods. So join us as we navigate the world of dividend investing in this episode filled with practical advice and insights.

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Chapters

• 0:58 Dividend Investing Misconceptions and Considerations
• 9:59 The Misunderstanding of Dividend Investing
• 20:03 Dividend Policies in Portfolio Building
• 29:29 Yield on Cost and Dividend Investing
• 34:50 Diversification and Risks in Dividend Investing