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What Most Investors Get Wrong About Dividend Investing
Episode 140
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Dividend investing is one of the most passionately followed strategies online - yet much of the enthusiasm is driven by misunderstandings of how dividends work.
In this episode, Evon Mendrin, CFP®, CSLP® of Optometry Wealth Advisors, dives deep into how dividends actually work, why they aren’t “free money,” and what ODs need to understand before chasing high-dividend stocks or funds - especially in taxable accounts. He also explores when, despite all of this, a dividend-focused approach might still be rational for the right investor.
In this episode, you’ll learn:
- What dividends actually are and how they function within public companies and your own optometry practice.
- Why dividends aren’t “extra” return, and how stock prices adjust for them.
- The real-world tax consequences of dividends - especially in taxable brokerage accounts.
- Why fewer companies pay dividends today, and how stock buybacks often take their place.
- How dividend investing can actually reduce diversification and tilt your portfolio away from global opportunities.
- What explains the performance of dividend-heavy portfolios (spoiler: it’s not the dividends).
- Why “I need X in dividends to retire” is a myth, and how to think about withdrawals and cash flow instead.
- When a dividend strategy can make sense - despite being suboptimal on paper.
Resources mentioned:
- Dimensional’s Research on Dividend Price Adjustments
- Meb Faber’s “Shareholder Yield” Book
- Ben Felix Video on Dividend Investing
Related Episodes:
- Ep 135: Beyond Indexing – An Optometrist’s Guide to Factor-Based Investing
- Ep 134: The Case for Index Funds – Why Optometrists Should Embrace Passive Investing
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The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.
Published on 3 months ago