Bill in my dealings with util. stocks it seems they are not ones to day trade with as share price appreciation is not one of their strong points. No I did not mean for everyone to put total savings in SO, but to bring out a cheap simple way to have a raising income that would have a good chance to keep up with inflation. PGN is another util. that has the same type no cost plan as SO and their are others that may not pay as much percent as these two, but would match a lot of funds in net yield.  I like a util. stock when talking about steady income every quarter unlike funds that may have more some quarters and less other quarters. Bonds funds, IMO, have up and down interest because of market or interest rates, where as ind. stocks like util. may not increase their dividends every year, but they will go to end to keep from decreasing them. On a scale from 1 to 10 with bank cd's being at a safe 10 and ind. bonds(short term) being at a safe 9 then I would put SO at a safe 7 or 8 in keeping their dividend steady with the ideal that 4 mil. ele. accounts are not going to close.

In taxable accounts would not a util. stock be better since their would not be any capital gains taxes to pay, but in a tax free like a Roth then they should be even except for not knowing what kind of income the funds will turn out each quarter.

Pro's and con's both ways!

Copie

:-} ( my new smile like yours).(One of these days I am going to take a computer course) 

ElLobo,

I don't know what I was thinking of.  It must have been sunspots.  I'm just not use to you talking in terms of income certain strategies.
I guess the bottom line after everything is said and done is that you have never shown any evidence that portfolios whose yield is higher than five percent is any safer in retirement than using a total return strategy with lower yielding investments regardless of the distribution method.
In my opinion you weaken your case even further by not differentiating between income yield and distribution yield manufactured by managed distribution, or capital gains converted into yield by dividend capture.

helmut

Bill,

I can't talk for copie of course, but for me, there's another whole aspect of this.  I'm using these dividend stocks to replace much of the role of bonds in my portfolio.  Your way will probably equal higher total return but this way will increase the total return over bonds.  Since fluctuation in  NAV doesn't yank my chain and the dividends are providing the cash flow to pay my bills and meet my cash flow needs (alert - fighting words ), I don't need to sell shares for income and I need a lower bond allocation to avoid the necessity of selling shares to provide for cash flow needs, therefore I'm increasing the total return of my entire portfolio although not necessarily in this individual area.

The other part of this, I have trouble with is what the funds invest in.  There was and is much investment in telecom companies and other things in utility funds which severely changes their natures from widows and orphans dividend funds to a much riskier animal.  I see the same kind of things in trying to evaluate health funds b/c of biotech.

Roberta 

Bill,

A discussion takes place whenever you say something that I don't agree with (6+3 is risky, regardless of the assets chosen for a portfolio).  A discussion takes place whenever I say something that you don't agree with (6+3 has an almost certain probability of success whenever the overall yield of the portolio is significantly greater then 6%).

'Maybehaps sometime we can do a power lunch, to have this discussion.  I'd suggest that old Scandanavian dish, 'Red Herring and Seed Corn Souflette"!  8-)

I agree El.

It's just that I'm more self involved than you apparently are>  So when I say 6+3 is risky regardless of the asset chosen for the portfolio, I mean it is  risky to me, not necessarily to you.

Despite a long, long discussion on the subject, we never have seen eye to eye about risk.  Let's face it, everything we discuss comes back to risk

I think the disconnect may lie in the fact that as an engineer, you may only see one best answer to each given problem.  To you risk is risk and it is the same for everyone in a given circumstance whether they recognize it or not.

To me risk can be changed by the way we act or think about something.  For example, those native Americans who excel at walking around without support on 40 story buildings under construction, where others would be so out of control of their emotions that it would effect their balance and cause them to fall.  Standing on a 40 story building is clearly to me riskier for the guy whose wetting himself.  Yet we would all tend to say that walking around on a high building is risky.  And the native American would say something different.

As for your suggest lunch, I thought we weren't allowed to eat our seed corn? :o}

best,

Bill

Roberta,

"I can't talk for copie of course, but for me, there's another whole aspect of this.  I'm using these dividend stocks to replace much of the role of bonds in my portfolio.  Your way will probably equal higher total return but this way will increase the total return over bonds.  Since fluctuation in  NAV doesn't yank my chain and the dividends are providing the cash flow to pay my bills and meet my cash flow needs (alert - fighting words ), I don't need to sell shares for income and I need a lower bond allocation to avoid the necessity of selling shares to provide for cash flow needs, therefore I'm increasing the total return of my entire portfolio although not necessarily in this individual area."

 You make an excellent point. Perhaps for a younger investor, total returns over the long run makes more sense. But for the nearing retirement or retired investor the important matter is income without selling shares. Fluctuations in NAV are not bothersome to this type of investor. What counts is income to live on.

A balanced portfolio of equities and income producing investments seems prudent. Allow the equity portion to provide for capital growth, and the other for income.

 Gene

Bill,

"So when I say 6+3 is risky regardless of the asset chosen for the portfolio, I mean it is  risky to me, not necessarily to you."

6+3, from an all equity portfolio, yielding a current market rate of well south of 2%, or a 'growthy' portfolio of the likes of XOM, Lowes, or Mister Softee, would seem quite risky, and way more then my heart could handle also!

Gene,

I'm not hung up on "not selling shares".  I do tax loss harvest and sell mutual fund shares to fund extra's and special things but it just makes more sense for me to lower my bond allocation and use dividends for cash flow.

Roberta