Yes the value of each share of ACC is higher than each share of DIVD in your calculation, but when it crashed, your 10 shares of ACC was worth 21 CHF or 2.1 CHF each. You had to sell 4.76 of them to get 10 CHF.
So your holding in DIVD is now 5.23 x 105 CHF. (Actually 4.33 x 105 as you forgot to sell 0.9 shares to make the dividend in the first year - but I think the value should be 210 not 105).
You’re saying sell 0.5 shares to get 10 CHF, but that means each share is worth 20 CHF. But you mixed up your numbers and each share is worth 2.1 and you have 10 of them which is worth 21.
Take a look at the start of your example again. You have an investment of 100 and each share was worth 10 initially, so 10 shares. Even your table says 10 shares
If you’re going to fling that then please say it correctly: irrelevant to stock valuations. From investopedia:
“ * Dividend irrelevance theory suggests that a company’s dividend payments don’t add value to a company’s stock price.
Dividend irrelevance theory also argues that dividends hurt a company since the money would be better reinvested in the company.”
The articles spend so many words barking up the wrong trees. Is this saviour or superiority complex? Perhaps there are people in the world who don’t care about total return, if they get steady slow gains and a steady salary without working.
Seriously, that’s why I get inflammatory with the dividend haters such as whoever wrote these articles, they have some superiority complex and want to educate us bumpkins.
I guess in a strictly theoretical setting it makes sense. Who cares if you get returns as dividends or capital gains.
Of course taxes come into it.
And also the fact that to pay dividends you have to have distributable profits and has the cash to pay them which already starts to skew you towards the more fiscally stable end of the distribution of companies.
Actually , the first table was my interpretation of your text. Maybe i didnt do it well. It was not illustration of my response.
My table would be like follows
DIVD
ACC
Shares
NAV
Shares
NAV
01-Jan-24
1
100
1
100
Dividends collected for 12 months
31-Dec-24
1
110
1
110
Dividends paid or capitalized
01-Jan-25
1
100
1
110
Dividends collected for 12 months
30-Dec-25
1
110
1
120
(includes 10 CHF cash)
Market crash by 90% for underlying assets
31-Dec-25
1
20
1
21
01-Jan-26
1
10
0.5
10.5
(sold 50% of shares)
02-Jan-26
1
100
0.5
105
(market popped 10X)
Anyhow, it seems we have different interpretations of how Dist and Acc ETFs work. So we wont come to agreement. I just think they would react equivalent in crash because they are just collecting and distributing (or capitalizing) dividends.
It could be also survivorship bias. After all, many businesses fail. Some don’t make profit. Others do not cash flow. To be able to pay dividends you need to have distributable profits AND have cash to pay them.
If you invest in dividend aristocrats (companies with a track record of growing dividends) you tend to underweight the dog stocks and “speculative, not yet very profitable tech” (e.g. Tesla).
I believe a superior way to filter out these stocks is Quality. Fundsmith invest in companies with return on capital much higher than the index. They focus on “companies that have already won”
Cutting your stock exposure too much will actually increase your chance of going bust over the longer term. Its a case of not being able to have your cake and it
It’s an excellent question, and probably the only question I haven’t answered for myself yet. That’s because I target FI without thinking too much about RE. To be clear: I expect to be FI in the not too distant future, but I have not concluded if and when I really will pull the trigger (but having also no intention to continue working a day job years beyond FI). On a basic psychological level, I plan to pull the trigger when the circumstances are right, and when I feel comfortable with my assets (see question three of yours).
3.2% with 80% in global equities
I have a lean FI target (basically what I need to survive, which I reached), and a FI target (what I consider a comfortable living standard). I aim to reach the FI target with a portfolio that generates enough passive income (without selling) to match my lean FI target.
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