Qualified dividends?

[qwerty3656]

Shouldn't Qualified Dividends be a bigger part of peoples retirement strategy? I never see them talked about here, but as I understand it you can earn $80,000 (MFJ) in Qualified Dividends and pay 0 taxes.

 

[SevenUp]

Yes, if that is the only income.

 

[chassis]

Agree with what I am perceiving is your sentiment. The tax treatment is great. The portfolio growth characteristic might not meet some investors' requirements.

To receive $80k in annual income from qualified dividends would require something around $4m in capital invested in such stocks. It's a good strategy imo.

A few posters chime in here and there that they use this strategy, but it doesn't seem to be mainstream on this site.

 

[yhoomajor]

It depends. Qualified Dividends are part of my retirement plan. But many folks on this forum have different views around dividends. After reading the forum for a while, I realized that a good chunk of folks here have pensions (and/or other income streams). So additional dividends may move them over some income limits that they might be trying to stay inside.
Imho - a balanced approach of dividend-oriented funds and S&P500 is worth considering.

 

[ERD50]

Capital Gains get the same treatment. -ERD50

 

[scrabbler1]

If any of your QD and LTCG income would be shielded from federal taxes because it falls within the standard (or itemized) deduction, then it would be "tax overkill" to have it.

 

[zinger1457]

Excuse my ignorance regarding dividends but are you able to accurately predict or manage qualified dividends? Dividends aren't a big part of my income and I have no idea how much of my dividends will be qualified until I get the 1099.

 

[pb4uski]

If any of your QD and LTCG income would be shielded from federal taxes because it falls within the standard (or itemized) deduction, then it would be "tax overkill" to have it.

+1 since deductions shelter ordinary income use Roth conversions if you have unutilized deductions since the QD and LTCG on top of the deductions will be 0% anyway.

 

[mrfeh]

Capital Gains get the same treatment. -ERD50

+1

OP - do a forum search on "dividend investing" or "total return". This horse has been beaten to death.

 

[ncbill]

Agree with what I am perceiving is your sentiment. The tax treatment is great. The portfolio growth characteristic might not meet some investors' requirements.

To receive $80k in annual income from qualified dividends would require something around $4m in capital invested in such stocks. It's a good strategy imo.

A few posters chime in here and there that they use this strategy, but it doesn't seem to be mainstream on this site.

Dividend index funds have had a lower total return than total market index funds.

But some people still prefer the "comfort food" of dividend income.

Usually via something like a "dividend aristocrat" approach where they cherry-pick individual dividend paying stocks based on various metrics.

Note that is a riskier approach than using a dividend index fund.

I'm not sure people who follow that approach fully appreciate the extra risk they're taking with such an approach.

And I remain skeptical that they're being adequately compensated for taking that extra risk.

 

[erkevin]

Excuse my ignorance regarding dividends but are you able to accurately predict or manage qualified dividends? Dividends aren't a big part of my income and I have no idea how much of my dividends will be qualified until I get the 1099.

All qualified dividends are also ordinary dividends. They designate as qualified (and receive favorable tax treatment) if you hold that equity for the correct amount of time around the ex-dividend date. So yes, you can manage them by when you buy and sell.

 

[lordjust]

+1

OP - do a forum search on "dividend investing" or "total return". This horse has been beaten to death.

im with these two..