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Also, I believe in the US ordinary dividends are taxed at the income tax rate which is much higher than the capital gains rate.
by cgh 1y ago
Also, I believe in the US ordinary dividends are taxed at the income tax rate which is much higher than the capital gains rate.
- boroboro4 1y agoIt doesn’t make sense to compare ordinary dividends to capital gains - either compare ordinary to short term gains or qualified to long term gains.
- ElevenLathe 1y agoWhy? These are just rules in a made-up game. They can be anything we want.
- deleted 1y ago[deleted]
- barchar 1y agoNo, most dividends are "qualified" and taxed at the long term capital gains rate, assuming you've held the underlying for a decent amount of time. Still, they're taxed, whereas buybacks allow the shareholders to control exactly when they take income. Also buybacks will tend to select for frequently traded shares with high cost basis, further reducing total taxes and selecting for longer term shareholders. They really are just better than dividends in every way.