Every penny of dividends you receive in a taxable account is subject to tax in the year you receive them.
If you believe this not to be true simply don’t report them on your 1040 this year.
Blog reader Dan, in turn, makes some very astute observations. You can follow it all here: While you’re there it’s worth checking out Mr. My last post there gives my view: (Note: well my intention was to also post this over there but it seems Mr. Basically Dan makes three key points: Far and away this is the most important point. The research is stunningly clear and precise on this. Receiving dividends in a taxable account is a taxable event.
For those readers with some basic knowledge it has been fun to sift thru the conversation.
JGI/Jamie Grill/Getty Images Of the many decisions a company's board of directors will need to make, one of the most important has to do with the company's dividend payout policy.
If, when, and how much cash a company decides to return to owners in the form of dividends rather than share repurchases, reinvestment, debt reduction, or acquisitions has an enormous influence not only on the total return but on the type of investor who will be attracted to ownership.
However, just like the gravity of an apple is hard to perceive in the shadow of the earth, so too it can be easy to miss the lost value to KO of the paid dividend against the scale of the company itself. This is why traders pay close attention to the ex-dividend date (this is the date that determines who gets the dividend if the stock is being sold. So, what about Dividend Mantra’s Dividend Growth Investing approach?Buyer buys BEFORE 10 Jan and the Buyer WILL receive the Dividend. The extreme gyrations do not affect my steadily rising dividend checks.Buyer buys ON or AFTER 10 Jan and they WILL NOT receive a dividend (because the rights to it already went to the seller as the owner of record). It will, however, affect people who sell shares for income.The directors who sit on a company's board of directors are responsible for determining a company's dividend payout policy; one of the most important decisions they will make.An intelligent dividend payout policy depends upon several factors, including opportunities for profitable growth, current tax laws, and a host of other considerations.In the case of stocks those forces are largely traders working with many variables, only one of which is the dividend payout. I also had a nicely profitable short term Netflix trade, but that’s an outlier.