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If you as a shareholder receive a dividend of X% of the share price, you owe tax on it. But if the company buys back stock and as a result the share price incre
by wskinner 2y ago
If you as a shareholder receive a dividend of X% of the share price, you owe tax on it. But if the company buys back stock and as a result the share price increases by X%, you do not owe tax on that unrealized gain until you choose to sell your stock. That’s good for investors.
- bobbylarrybobby 2y agoAlso, dividends are taxed as ordinary income whereas stock buybacks lead to capital gains, which almost always have a lower tax rate.
- e_y_ 2y agoQualified dividends are taxed at the same rate as long term capital gains, although the rules for what qualifies can be tricky (special one-time dividends in particular).
- HDThoreaun 2y agoOnly if youve held the stock for less than 6 months. Most dividends are taxed at capital gains rate.
- creativeSlumber 2y agobut there is no guarantee of a stock buyback increasing the stock price by x%, correct?