Don't Sweat A Dividend Tax Hike

About two weeks ago, I did my best to dispel the rumors about a bubble in dividend-paying stocks. One reader wasn't buying it, though. "You totally forgot about the dividend tax hike, Lou. It's going to ruin dividend investing!" Au contraire, mon frère. I didn't forget about it. It's just that the dividend tax hike doesn't really matter when it comes to dividend stock prices. Here's why…

Let me assure you, though. Higher taxes are not going to lead to a collapse in prices. For one thing, many investors - across all income tax brackets - own a large portion of dividend stocks in tax-advantaged accounts. So they won't feel the sting of a tax increase one bit. Moreover, only the highest earners would be subject to the highest rates. And they only account for a small percentage of the population.

Source: Seeking Alpha

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