Is there an ETF that only invests in shares that pay no dividends?

Wrong. Most companies eventually mature and come to a point where they have more cash than they know what to do with. Divs are a good way to return that capital to shareholders. Would you rather prefer value be destroyed in sub-optimal capital allocation decisions, crazy M&A deals or from continued pumping of capital into their overvalued shares?

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I would prefer stock buybacks.

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Yes, for Swiss investors stock buybacks are more tax efficient than dividends. I think it is true for most countries, but not to the same extend.

Best quote on the topic I’ve read in a while (not to be takien too seriously)

I only invest in companies that give dividends because they know they are inferior to me and I can do much more with the capital than they can

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Yes, but why invest only in companies that choose a tax inefficient payout of the capital?

Guys, before going once again in circles talking about dividends vs buybacks, please read the thread on capital allocation. There is no simple black or white situation where one is better than the other.

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I guess the answer is no. I was hoping this thread wouldn’t end in a religious war about the merits of dividends.

I don’t like dividends because of the taxation aspect.

I recommend Ben Felix’s video on the subject:

To have less dividends, you need to select a growth fund, Berkshire or a leverage ETF

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If the market was a machine it would be the case.

Stock buyback is not an unlimited option.
For example, CH OR allows a stock company only to own 10% of its own shares, 20% under certain conditions. The function of a buyback is rather limited as a div multiplier.

What if they buyback & vernichten the shares? Is it then unlimited, buyback till one share is left? Isn’t that the usual shareholder-friendly process? Just buying back but keeping the shares doesn’t increase the EPS etc. Keeping them in the books increases the likelihood of them being “given” to management, which unless it is a reasonable amount & really is deserved, is actually shareholder-unfriendly.

They have to pay taxes if they do that. That’s why the net price of buyback is lower when it happens (for example BFW Liegenschaften did that “recently”).

Is it still the case that Berkshire is one option to have a sort of ETF with no dividends? I didn’t find anything better so far…

The top 5 companies of the „Berkshire ETF“ make up for 75% of the portfolio (37% is in Apple).
Just hope you are aware of that. :slightly_smiling_face:

Actually in Austria they have that too.

image

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Interesting chart!

However presumably some of the increased/decreased performance of the “dividend initiator”/“dividend eliminator” categories is not something you could trade on in advance: i.e. you’d have to own a company already to profit from the growth when it announces it will start paying a dividend for the first time.

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Probably.

But I assume most dividend-growing companies have increased their dividends in previous years.

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True.

The (IMO) major message still holds: over time, dividend paying companies perform better than dividend non-payers.


Edit: “better than” correcting “better that”

According to portfolio visualizer, $100 invested in the US Stock Market from 1973 to 2021 would have grown to $15,182. Is something off in this chart? And why didn’t they include a market cap-weighted investment as comparison?

I wonder if AAPL doesn’t have an outsized impact on the returns? Definitely should be compared with capweighted anyway.