I have come across this idea that it is preferable to select your own stocks as opposed to buying an ETF when it comes to building a dividend portfolio. I am curious as to where this wisdom comes from when the ‘usual’ advice (for long-term investing) is to stick with an index.

I am in the lucky position where I have inherited a large sum of money before my 30’s. It is just under seven figures. Half this money will be going into long-term growth (SP500/BRK.B) while I am looking to generate income with the other half to pursue personal endeavours.

Something like a 4%+ yield will be enough to support me (which VDY/XDIV have). That said, as my time-line for this is extremely long, I believe I will be missing out on a lot of dividend growth due to the fact that I do not have control over whether a stock will be held in the ETF. The concept that a current stock at 4% yield might grow into 5, 6, 7% for my cost through consistent dividend increases is obviously hyper-appealing.

Also, the underlying stocks in the ETFs I am planning on purchasing are all the same. As a Canadian, they are: the big 6 banks, the energy, the telecoms, the rails. The only problem is, as someone who subscribes to boglehead philosophy, this idea of selecting individual stocks seems to fly against what is standard practice.

Thoughts? Will I lose out on a lot of yield in the long-run if I stick to an ETF? Do I simply need to do my DD on each of these 12 companies to make sure I believe in its long-term potential, and at the very least, not depreciate in value?

Thank you.

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