Investing for dividends: Shares or funds?

[ATV]

Say I wanted to put aside £1,000 every month for long term buy and hold (20+ years)

What is the main advantage of going for tracker funds over picking say 20 stocks over the next few years which I do my research on that have good P/E ratios and pay decent dividends and then monitoring the stocks myself a couple of hours each month, cutting out any deadwood myself and keeping a track on the yields and dividends.

Forgive me for a daft question, but wouldn't this mean that I get more dividends which I can reinvest into shares, rather than buying 1 or 2 tracker funds which will only pay 1 or 2 dividends but then also charge me hefty management fees?

Please clarify for a newbie investor?

[ATV]

walm said:

Out of interest, why are you focused on dividends rather than growth?

Because I'm not sure I could pick 20+ stocks and predict accurately for growth.

Peter Lynch in his book "One up on Wall Street" listed the best performing stocks of the 90s. A $10,000 investment in LOW (Lowe's companies) in 1989 would have yielded $152,000 by 1999. However the same amount in DELL computers would have returned $8.9 million

I'm not sure I could predict a 10 year growth like that, so I'd rather stay safe and have a general mix of say 20+ shares in companies like Coca-Cola or Gillette which pay good dividends for income or reinvestment and *hope* that my capital returns provide a nice nest egg rather than *expect*. It would be great to have both though.

Warren Buffett likes to buy undervalued stocks and then hold forever (theoretically). He's never actually added to his Coca-Cola position since he first bought in the 80s. He too a 9% stake and watched the price rocket over the years to a holding of around $13 billion now. If that investment technique is good enough for the world's second richest man, I'd like to investigate further