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in any case I can list 804 stocks that did change so it isn't going to change things data mining.
I think you need to look at the wall street darling at that time DVY. it contained the hand picked cream of the crop dividend payers. it fell by more than the market in 2008-2009
DRIPs, no matter how you set them up, are one of the best bargains around. You almost never see the financial world doing so much for investors for so little cost. DRIPs are also a great way to slowly build wealth while going about your everyday business. Robert Gibb, a Victoria-based investor who was written widely on DRIP investing online and in Canadian MoneySaver magazine, calls them a “get rich eventually scheme.”
If you honestly don't believe that DRIP investing will not garner huge gains over the long haul, or have found you don't make very big gains by doing so, you need to better educate yourself on the basics of investing and start picking better stocks to invest in.
You're not understanding.
Share A $100.00
Share B $100.00
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Share A pays a $50.00 dividend.
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Dividend reinvested. Now 1.5 of Share A = $100.00 total.
Share B currently valued at $100.00
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Share A pays dividend. $75.00 (1.5x$50.00)
Share B stays the same.
Share A = 2.25 Shares worth $100.00 total.
Share B = 1 Share worth $100.00
At the end of the year, assuming long positions, you pay $18.75 in tax on the dividends. You pay $0.00 in tax for Share B.
Net Return for Share A: -18.75%.
Net Return for Share B: 0.00%
Quote:
Originally Posted by Annuvin
I believe I demonstrated how this is inaccurate in the example I cited above. You are forgetting that the stock price for many DRIP eligible stocks also increase on an annual basis in addition to the dividend payout you would be reinvesting.
In the end, its a wash. The appreciation in Share A would occur if it occurs, with or without the dividend. A dividend is a return of cash to the shareholder, this cash is a part of the stock price.
Dividend investing is not tax efficient for someone in accumulation. Not saying it's the wrong choice, it simply is that way. I use it, but it's not all I use.
Last edited by LordSquidworth; 08-06-2014 at 08:04 AM..
Dividends reduce the principle value of your stock position. And taxes do have an impact on your scenario but you can choose to ignore them if you want
I just realized that you're the same financial wizard who tried to argue that you were using pre-tax money to pay back a 401(k) if you used unspent money in a bedroom nightstand, but if you wrote a check from your bank account then you were using post-tax money. ROFLMAO
Dividends are taxable if not in a sheltered account in the year received .
Capital appreciation on the same total return if not via dividend is not taxable along the way ,only after sold.
In both cases total return could be the same only one gets taxed earlier and one later or maybe never if heirs inherit the non dividend payer.at a stepped up basis..
Considering that 85% of the S&P 500, for example, pay dividends, I'm not sure what your point is. Surely, you're not advocating staying away from those 425 companies because you have to pay taxes on their dividends?
The highlighted statement is incredibly ironic considering that you are 100% incorrect on pretty much everything that you wrote.
LOL, irony abounds.
Quote:
Try telling the IRS that when you sell your position, you are reducing your cost basis by the amount of "principal" that was returned to you via dividends over the years.
I never said anything about a "return of principal." My comment was in reply to someone stating that selling shares in a down market will deplete your principal whereas receiving dividends would not, and I explained that there would be no difference.
Let's use a very simple example so that even you can follow along:
You pay $100 for 1 share of XYZ. It pays a $10 dividend, which you use to buy a much needed 'Investing For Dummies' book, leaving the price of your one share at $90.
Considering that 85% of the S&P 500, for example, pay dividends, I'm not sure what your point is. Surely, you're not advocating staying away from those 425 companies because you have to pay taxes on their dividends?
of course not. never let the tail wag the dog. I only meant folks need to understand what a dividend represents and it comes at the expensive of a reduction in share price that has to be retraced via capital gains.
simple concept yet so few understand it is not like bank interest that just gets added on to principal when received . the dividend in itself is a wash with the day prior to getting it .
where the quarter or the years market action take it from that point is a separate issue but the first capital gains the stock sees will be a retrace of where it started after pay out.
I just realized that you're the same financial wizard who tried to argue that you were using pre-tax money to pay back a 401(k) if you used unspent money in a bedroom nightstand, but if you wrote a check from your bank account then you were using post-tax money. ROFLMAO
BTW, it's principal, not principle.
Hard to argue with the truth, the money in the nightstand would not be post tax but the money coming in from current cash flow would be
I'm all for educating people, but sometimes it seems to me, that some people just want to pee in other peoples cornflakes!
I think the hard thing is people just not getting the math, if you got the math and said you still thought your strategy was better or you simply liked it better it would be different. Not understanding the math and functionality behind the investment is what causes the pissing imo
discussing strategy is one thing. but when people have facts they believe to be true incorrect that is a different issue.
the forums are a place to learn and to correct myths and all the believing one's own bull-sh@t that folks do unknowingly.
to many run on wrong facts ,misbelief and things they believe to be true that really are not.
eventually some of this wrong information can hurt you .
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