Dividends4Life: Worried about taxes on dividend?

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Worried about taxes on dividend?

Posted by D4L | Friday, September 03, 2010 | | 0 comments »

Investment advisors, including CNBC's Jim Cramer, are touting dividend stocks as one of the best investments amid the shaky economy, but NextEra Energy's CEO is among those worried about the upcoming tax increase on them. In an e-mailed opinion piece, Next Era (NYSE: NEE) Chairman and CEO Lewis Hay writes, "Right now, a Floridian with an average of $1,000 a month in dividend income pays $150 of that to the federal government. But if Congress fails to act, the amount lost to federal taxes could rise to as much as $396. In my view, this would be bad for Florida and bad for the U.S. economy."

The stereotypical view of dividends is that they largely go to older people, but Cramer on his "Mad Money" TV show has been espousing them as a relatively stable investment for investors who are worried stock market volatility, but want a little more than the meager yields in savings accounts and CDs. These days, some companies fall into the category of what Cramer calls accidental high yielders because their share prices have gone down, but the dividend is still strong. (The yield is figured by the dollar dividend rate per year divided into the share price. For example, a $10 stock that pays a 50 cents a year dividend would have a 5 percent dividend yield.)

Source: South Florida Business Journal

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