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LETSGEAUX2
Member since Oct 2012
388 posts

Capital Gains Vs. Dividends

Can someone explain the difference in a very simple way? I have 2 index funds and 2 managed mutual funds right now fwiw.


wiltznucs
South Florida Fan
Apollo Beach, FL
Member since Sep 2005
8005 posts

re: Capital Gains Vs. Dividends
quote:

very simple way


You buy a stock at $20 and sell it a $30 you have a capital gain of $10. On the other hand, you could buy a stock at $20 and it falls to $10 and then you sell for a loss. You then have a capital loss of $10.

Dividends are typically associated with stocks but also index funds etc. As a shareholder you in principle are a owner of the company. The dividend is your respective share of the companies profits after the company handles its expenses.

The dividends are considered a form of capital gains and are part of your taxable income each year.
This post was edited on 6/5 at 12:26 pm


idlewatcher
LSU Fan
Houston
Member since Jan 2012
11914 posts

re: Capital Gains Vs. Dividends
Wiltznucs is correct.

@ OP - don't confuse the two. "Capital gain" occurs in the event of sale of a stock whereas dividend payouts are static in that they occur monthly/quarterly or what have you.


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