I love dividend stocks , but income investors face an inherent disadvantage against growth investors, one that costs them tens of thousands over decades of investing. The disadvantage comes from the regular taxation of your dividend earnings. Each year, Uncle Sam takes his cut of your hard-earned dividend payments. There's one way to save this money and get the most out of your dividend investments -- by holding high-yield stocks in a tax-advantaged retirement account like an IRA.
Waddell & Reed Financial (NYSE: WDR ) paid out 106% of its income over the last year for a 10.5% dividend yield. The sale and maturity of some long-term investments has helped the $1.5 billion asset manager return more than it earned to investors for the last two years. Greenhill & Co (NYSE: GHL ) paid out 110% of its income over the last year for a 7.2% dividend yield. AT&T (NYSE: T ) paid out 91% of its income over the last year and currently yields around 5%. The company's acquisition of Time Warner brings revenue diversification an unmatched scale versus other telecom providers. That should mean cash flows sufficient to invest in future growth as well as maintain a sizable dividend.
Source: NASDAQ
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