Pros and Cons in Investing in Blue chip Dividends

[tim]

If I have $10,000 and uses Rakuten Securities
and planning to invest it in a diverse blue chip dividend
like KO,JNJ, MCD, AAPL, MA, V and etc. and gradually buy more to diversify.
Rebalance like once a month or once in 2 months.

What are the pros and cons in it ?
Is it better to buy an ETF Dividend instead?

[RetireJapan]

Pros: you will get dividends, hopefully these will grow over time
Cons: you will likely underperform a low-cost index fund (in total return, ie capital gains+dividends), you will pay 10% US withholding tax on the dividends, you will potentially have fx tax reporting issues

Don't understand what you would be rebalancing, or why.

[TokyoBoglehead]

If I have $10,000 and uses Rakuten Securities
and planning to invest it in a diverse blue chip dividend
like KO,JNJ, MCD, AAPL, MA, V and etc. and gradually buy more to diversify.
Rebalance like once a month or once in 2 months.

What are the pros and cons in it ?
Is it better to buy an ETF Dividend instead?

https://www.youtube.com/watch?v=4iNOtVtNKuU

Did you get a chance to look through that Bogleheads book?

[tim]

Don't understand what you would be rebalancing, or why.

Like instead of selling just buy stocks that are dipping to balance the ratio

https://www.youtube.com/watch?v=4iNOtVtNKuU

For some reason I'm not convince yet,
What if I invested in like AAPL, MSFT or within the top 50 index fund that has dividends that you can reinvest

[TokyoBoglehead]

Don't understand what you would be rebalancing, or why.

Like instead of selling just buy stocks that are dipping to balance the ratio

https://www.youtube.com/watch?v=4iNOtVtNKuU

For some reason I'm not convince yet,
What if I invested in like AAPL, MSFT or within the top 50 index fund that has dividends that you can reinvest

I do not understand your question. The video, and the academic research linked below, clearly demonstrate why chasing dividends in an inefficient and ill advised strategy. You also will be paying taxes on that realized capital, which can be avoid using a trust (ala Emaxis Slim).

https://drive.google.com/file/d/15Z94LD ... bdJat/view
https://drive.google.com/file/d/1G3daMZ ... kmd1c/view
https://drive.google.com/file/d/1kVBKtM ... BOXQC/view
https://academic.oup.com/rfs/article-ab ... ogin=false

[RetireJapan]

For some reason I'm not convince yet

That's fine. I think everyone goes through this. Just do whatever you want, and see how it goes for a few years. Do buy an index fund so you can compare how it does to your other investments.

It's a lifelong process of adjusting, learning, and improving (hopefully).

[tim]

https://www.youtube.com/watch?v=KcHsmQrh84w
I am more of a visual guy but this video made me think

I do have index fund in my NISA,
and since I already bought individual stocks might as well hold them till the price is right

[TokyoBoglehead]

https://www.youtube.com/watch?v=KcHsmQrh84w
I am more of a visual guy but this video made me think

I do have index fund in my NISA,
and since I already bought individual stocks might as well hold them till the price is right

Covered call ETFs are a different animal. With the expense ratio, and a literal capped upside they make no sense for most investors.

Dividend investing is often an emotional decision for many investors. They are attracted to the feeling of security, and the constant flow of dividends. It is not strictly a logical decision.

As for your single company stocks, simply selling now and rebuying index funds would make the most sense.

Do what is right for you, but ask yourself if you are making an emotional decision first.

[mighty58]

Like instead of selling just buy stocks that are dipping to balance the ratio

This is what every beginner thinks they can easily do. It just looks so easy and obvious while looking at a chart of past performance. But don't fool yourself, it's nigh on impossible to do consistently, and there is plenty of research that shows that even professional fund managers, whose literal job it is to research stocks, and buy/sell them at the "right" moment, do NOT outperform the index fund over time.

[beanhead]

This is what every beginner thinks they can easily do. It just looks so easy and obvious while looking at a chart of past performance. But don't fool yourself, it's nigh on impossible to do consistently, and there is plenty of research that shows that even professional fund managers, whose literal job it is to research stocks, and buy/sell them at the "right" moment, do NOT outperform the index fund over time.

Yes. This.
Also, how much time do you have to do all the research necessary? If you have plenty of time available and enjoy stock-picking as a hobby, go ahead and do it. You may beat the market, if you are lucky...