In life there are precious few things that are lily pure in which nothing negative could rightfully be said about them. I am not foolish enough to believe that dividends are the ultimate panacea. Join me today as don myself in black and explore the the Dark Side of Dividends.
Here are the top five reasons for not paying a dividend:
Black is just not my color. I prefer my white hat (with a crimson script A, of course). Here are my five responses to the above:
Though not perfect, dividend distributions meet a very specific need for investors looking for a reliable and growing revenue stream. Not all companies that pay a dividend are good dividend investments. Investors must do their due diligence prior to purchase.
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I think the important thing to remember is that dividends is a result of your investment working for you.
I often find myself remembering even if I am paying taxes, it is because I am making money so while I would rather pay less taxes on my dividends, I am still making some money that I don't have to punch a time clock for.
"It is true that dividends are double taxed in some countries. Many governments, including the U.S. have recognized this, and have provided tax breaks to minimize the double taxation. In the U.S., qualified dividends are taxed at a reduced rate of 15%."
Great post.
First, for those paying taxes on dividends, it's still double taxation. It's just bad government policy. It's almost as bad as taxing retirees' Social Security payments--that's taxing money on a portion of which they were already taxed.
Second, that 15%, for now at least, is the maximum rate. For those in the lowest tax bracket, qualified dividends are not taxed.