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Some companies 'reinvest' profits in their operations and don't pay dividends. Others avoid dividends, as dividends are profits that are taxed twice. (Once for
by wingspar 6y ago
Some companies 'reinvest' profits in their operations and don't pay dividends.
Others avoid dividends, as dividends are profits that are taxed twice. (Once for corporate income taxes, and again for individual income taxes.)
Selling the stock for a higher price has opportunity for favorable tax treatment at the lower long-term capital gains vs dividends taxes as regular income.
- vonmoltke 6y ago> Selling the stock for a higher price has opportunity for favorable tax treatment at the lower long-term capital gains vs dividends taxes as regular income. Dividends are generally taxed at the long-term capital gains rate, not as ordinary income.
- mikorym 6y agoThis makes sense to me for private or public companies where the owners are also employees or otherwise benefit. It doesn't necessarily make sense for me if you are a very small stakeholder.