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re: I'm looking into investing based on dividends...

Posted on 6/9/17 at 1:57 pm to
Posted by sneakytiger
Member since Oct 2007
2473 posts
Posted on 6/9/17 at 1:57 pm to
quote:

It's not income. It's capital gains. 


Short term cap gains are taxed as ordinary income, as opposed to dividend income taxed at 15-20%, right?

Eta: on top of Obama's 3.8% frick you tax
This post was edited on 6/9/17 at 7:19 pm
Posted by UltimaParadox
Huntsville
Member since Nov 2008
40858 posts
Posted on 6/9/17 at 6:27 pm to
Yes you would have to hold the shares at least 1 year to get taxed at long term capital gains instead of normal income.
Posted by foshizzle
Washington DC metro
Member since Mar 2008
40599 posts
Posted on 6/9/17 at 6:53 pm to
I had a guy excitedly tell me about a year ago about some stock he had that not only paid a dividend, but the yield kept getting higher and higher.

I pointed out to him that maybe this was because the stock had dropped over 50% from where he bought it? He commented that it would come back eventually.

A few months later out of curiosity I looked it up. The yield was back to normal ... because the board cut the dividend.
Posted by leoj
Member since Nov 2010
3106 posts
Posted on 6/9/17 at 7:31 pm to
Should always check on dividend history and the ability of the company to pay it out if you are counting on it long term as part of your reason for holding on to the stock, that's for sure
Posted by tuptiger
Member since Jan 2008
4314 posts
Posted on 6/9/17 at 9:30 pm to
That's the best part of buying ex div date or selling ex div date

Taxed as CG. Not income
This post was edited on 6/9/17 at 9:30 pm
Posted by matthew25
Member since Jun 2012
9425 posts
Posted on 6/9/17 at 11:08 pm to
The ObamaCare tax -- you make over $250,000? Well done.
Posted by makersmark1
earth
Member since Oct 2011
15871 posts
Posted on 6/10/17 at 5:54 am to
I would recommend the book, Dividends Don't Lie by Janet Lowe.

Be careful. High yield often means that a dividend cut is imminent.

Look for dividend growth. Does this business has earnings to support and grow the current dividend? Is a question to consider. Also, does this company have a history of raising dividends over the years? You might by a stock that is yielding 2.5%, and if they double the dividend every 10 years, you will be getting 10% on your money after 20 years.
Posted by sneakytiger
Member since Oct 2007
2473 posts
Posted on 6/10/17 at 7:10 am to
My point is you will pretty much always pay more tax on a short term capital gain than qualified dividend income. Are you holding the stocks for more than a year?
Posted by leoj
Member since Nov 2010
3106 posts
Posted on 6/10/17 at 7:17 am to
Simply safe dividends is a good resource to get a quick rating on the safety of a company's dividend

Also you can use screeners on certain sites to find companies that may have lower yields but have been growing it over the past few years at higher rates
Posted by WM_Tiger
NELA
Member since May 2017
1576 posts
Posted on 6/10/17 at 12:00 pm to
CentryLink pays a 8% dividend. Plus it's cheap.
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