Mebane Faber recently wrote a controversial piece on dividend investing. Thanks to Kyith for sharing it. Mebane said that there were many studies to show dividend paying stocks beat non-dividend paying stocks, or the broad market as a whole: Looks impressive right? Yeah! Dividend stocks for the win! But little did people realise the dividend stocks that beat the broad market were because they were also VALUE stocks. To help you understand the differences I have drawn a Venn diagram for you: In a nutshell (I am generalising here to simplify the explanation), Section A = Value Stocks = They tend to outperform the market as a whole Section B = Dividend Stocks = They tend to under-perform the market as a whole Section C = Value Stocks that pay Dividends = They tend to outperform the market as a whole It is important to note that we are comparing Total Returns (capital gains + ......