Everyone’s tax situation is different… For me div stocks along with index funds is the way to go. For dividends, I lose 15% due to US witholding tax but 85% of the dividend is tax-free. If I sell a stock I’m taxed at 28% capital gains. This is for Portugal when I move next year
He never talks about US witholding tax and given his Canadian examples he only invests in Canadian companies and most people I know largely invest in US public companies. There is no way to get around the witholding tax unless you want to pay it in your own country.
Each to their own. Definitely not irrelevant in my situation
Yes, the US has the withholding fee but UK stocks come with Stamp Duty tax. Eitherway governments want a cut of your money. Two things are certain in life: death and taxes
Lucky I’m not in the uk so…It’s 0.5% hardly comparable with withholding tax. Is there even stamp duty on US stocks. In Ireland the fee is waived for US stocks
UK pay 0.5% stamp duty as well. Also we don’t tend to pay stamp duty on US stocks, it get’s waived. But Freetrade has the 0.45% exchange rate. Stamp duty not paid on ETF’s either
Ye I kind of said that in the above. I can’t use FT not in Ireland yet. Regardless, 1% upfront is nothing. We pay 15% on withholding but there is no other tax burden for me after that. Making dividends relevant
The only stamp tax I’ve ever paid was on the FT shares I bought
Ah sorry yeah I got your message wrong. I assumed you were out of the country and waiting to use Freetrade or something.
The FT shares I bought are also the only ones I’ve paid stamp tax on
You’re kind of missing the point, dividends are irrelevant in terms of selecting stocks. There’s a large group of new investors that are convinced dividend paying stocks are somehow more robust and will generate greater gains over time - this is not true (can’t argue with the maths). Also wrong to say you pay 28% CGT without taking into account your tax band
A lot of dividend stocks are more robust, not because they pay dividends but because they tend to be large well established companies that generate a lot of cash (at least the best dividend stocks are).
Dividends shouldn’t be your only consideration when choosing stocks, but they are not irrelevant, they are part of the total return
I can only assume you didn’t watch the video Dave?
No, I’m at work so I didn’t watch it
at least im not employing you then
For my situation it is a flat 28% in Portugal tax band is irrelevant. 85% off the dividend from public companies will be going into my pocket. I’ll take my chances with the dividends. As I mentioned earlier I have ETF’s and also will have private company dividends. Those sweet sweet tax-free dividends
This is exactly what my video highlighted the other day, people trying to force their investing style onto you.
I see dividends supplementing my income, in the form of passive income. Cheques getting paid to me every other day/week/month from holding positions in a diversified variety of stock picks.
In the long term will I out perform the market? Maybe, maybe not. But what I do know is for my psychologically and what I want from the stock market journey, it’s the investment strategy for me.
I could pull up numerous videos countering the dividend irrelevance theory. But it’s horse for courses like I said, do you and good luck with it
Nobody is forcing any investing style - if anything it is a warning against not truly understanding what you are investing in. There is a notion that dividends are a factor for evaluating stocks which is wrong, there is a belief that dividends and dividend history is a safety net for a portfolio - they are not.
If I was going to be a stock picker (which you are if you’re a dividend investor) then I would look at other factors
That I agree with 100%, need to study balance sheets, the payout ratio, does the company have a moat, is the earnings heading in the right direction…among other things.
Just the heading and thread title is wholly misleading which irks me, but your point and the video itself when broken down is what “dividend” investors should aim to study when picking a stock.
You don’t have to be a stock picker to be a dividend investor - most of my dividends come from investment trusts.
That’s true, just look at the FTSE 100 yielding just under 5%. There’s many a way to pick up passive income in the market.
true, but if you only select dividend paying stocks you are excluding 40% of the market
But that’s my point, maybe folk don’t feel comfortable investing in that other 60%. Maybe it doesn’t fit into the reason they started investing.
Nobody can predict what or where the market, ETF’s, dividend stocks, growth stocks, IPO’s will be in 20/30 years.
It’s a strategy which is individual to that person, if people feel more comfortable investing in that 60% of growth stocks then batter in, do you mate and don’t worry about anyone else.