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And friendlier in regards to taxation. Doing a roundtrip of buying more shares with dividends means paying income taxes.
by mxschumacher 6y ago
And friendlier in regards to taxation. Doing a roundtrip of buying more shares with dividends means paying income taxes.
- jogjayr 6y agoI hear this a lot, but is it really true? For shares of US companies (or foreign companies listed on US exchanges) held for > 60 days before the ex-dividend rate, dividends are taxed at the long-term capital gains rate.[1] 1. https://www.investopedia.com/ask/answers/090415/dividend-income-taxable.asp https://www.investopedia.com/ask/answers/090415/dividend-inc...
- skybrian 6y agoThe rate may end up the same in many situations, but it’s still helpful to control the timing on when you pay long term capital gains. With dividends you’re still paying now rather than later, or perhaps never. (There’s no capital gains on donated stock or inherited stock.)
- christophilus 6y agoThe point is that you pay 0 tax until you sell. That’s better than being forced to pay long term capital gains every year on a dividend.