Seeking Alpha

What's in your ETF? Dividend valuations stretched

Comments (10)
  • wigit5
    , contributor
    Comments (4050) | Send Message
     
    How are dividends less tax-efficient?
    24 Feb, 03:38 PM Reply Like
  • frosty
    , contributor
    Comments (693) | Send Message
     
    Also, dividends are more predictable than capital gains.
    24 Feb, 04:43 PM Reply Like
  • Investing Doc
    , contributor
    Comments (442) | Send Message
     
    I think it's the fact that they're taxed as ordinary income, whereas LT capital gains are taxed at a maximum rate of 20%. (Somebody feel free to correct me.) That being said, if you've already maxed out contributions to your tax-deferred accounts and have dry powder, choosing a non-dividend paying stock as opposed to a dividend-paying stock simply on this basis alone would seem to be a foolish decision.
    24 Feb, 04:15 PM Reply Like
  • frosty
    , contributor
    Comments (693) | Send Message
     
    Qualified dividends are taxed at the capital gains rate (15%). Ordinary dividends are taxed as ordinary income. Bing or Google it to find the criteria.
    24 Feb, 04:48 PM Reply Like
  • wigit5
    , contributor
    Comments (4050) | Send Message
     
    okay I have nearly all qualified divi's in 2013 so that must be why I didn't know. Thanks Frosty
    24 Feb, 04:52 PM Reply Like
  • healthythoughts
    , contributor
    Comments (2904) | Send Message
     
    Roth IRA accounts are tax free great way to save for retirement w/dividend reinvesting
    28 Feb, 07:49 PM Reply Like
  • daveroberts
    , contributor
    Comments (2) | Send Message
     
    Dividends are taxed at a higher rate than capital gains.
    24 Feb, 04:33 PM Reply Like
  • daveroberts
    , contributor
    Comments (2) | Send Message
     
    One might think that SDY is generously valued because of the recent run-up. However, companies are sitting on a huge wad of cash, and the companies that make up SDY have a 20-year history of raising dividends each year. With their heap of cash, will we see bigger than usual dividend increases?
    24 Feb, 04:33 PM Reply Like
  • jforman
    , contributor
    Comment (1) | Send Message
     
    I agree as long as the dividends are qualified.
    24 Feb, 04:33 PM Reply Like
  • edhogan
    , contributor
    Comments (4) | Send Message
     
    History tells us that the stocks of companies with consistent track records of increasing earnings and dividends out perform, on a long term basis, growth or even value stocks with little or not dividend history. If the dividend oriented ETF's are too rich on a valuations basis, you could wait for a market correction to buy more. However, in my opinion, to chase growth of value stock oriented ETF's would be a mistake.

     

    Perhaps the best approach is to buy dividend growth oriented ETF's whenever you've got the cash to invest long term. Otherwise sit on the sidelines.
    24 Feb, 08:23 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|