Dividend investing is a tried-and-true strategy to incorporate into your overall investing approach. When you receive your cash dividends (which are usually paid out quarterly), you instantly have more money to add to your savings account or put back into your portfolio.
But, what if you received dividends in crypto instead of cash? In this segment of Backstage Pass, recorded on Jan. 5, Fool contributors Rachel Warren, Trevor Jennewine, Jason Hall, and Jamie Louko discuss.
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Rachel Warren: I saw this article on Yahoo Finance that reported that for the first time a company that's listed on the Nasdaq is going to be offering investors a dividend payout in the form of Bitcoin (BTC 2.00%). According to the piece, "the Bividend will be payable at $0.05 a share owned in Bitcoin based on Bitcoin's price on the date when dividends are distributed."
I'm curious guys, would you want to receive a dividend in Bitcoin or do you think this is going to be adopted, this approach, by more companies in the future?
Trevor Jennewine: I'm going to take the controversial side of this one again since I was outvoted three-to-one last time. [laughs] I'm going to say sure, why not? I think Bitcoin could have a place in a long-term investor's portfolio and it's certainly a volatile way to pay dividends.
But at the end of the day, I think that if you get a little bit of exposure to cryptocurrency like this and you have a diversified portfolio on top of that, I think that's fine.
Jason Hall: As somebody that is also, I think Bitcoin and other types of cryptocurrencies that are going to prove to be the good ones, are worth owning for different reasons, whether as a store value or because they're programmable money, I think it's fine.
I think there's also some potential tax arbitrage benefit because it fits a tax-free transfer of assets versus a dividend payment where you have to pay that, treat it as a long-term capital gain.
Maybe that's even better. We'll see though. We'll see. Jamie.
Rachel Warren: Jamie.
Jamie Louko: Dividends aren't really a part of my strategy. I'm not using them to make money. I just reinvest them anyway.
Maybe not Bitcoin. I'll take Ethereum (ETH 0.86%) just because I see it more as a payment method more often than Bitcoin. Yeah, sure, why not? I'll take it.
Rachel Warren: I think it could be an interesting way to get a little bit of exposure to crypto without buying an outright, but I personally still prefer cash dividends.
