Paying Dividends Early

[javacontour]

It seems companies are looking to pay dividends early, in anticipation of potential tax increases come January 1 as a result of "The Fiscal Cliff."

I looked at my employer and they are looking at paying dividends for the next three quarters during the December 2012 dividend distribution.

Good on them. I have confidence that those earning the dividends know best what to do with the money they've earned by risking their own capital investing.

Now if only the folks in DC were so concerned about the welfare of the taxpayer

 

[gathermewool]

I've been debating moving a 20-40% chunk of my 401(k) into fixed at the end of the year, until this whole thing has blown over. It would be nice to be right for once, and time it nicely to dump it all back in for the subsequent up-hill climb (maybe...)

 

[MolaKule]

Quote:
Good on them. I have confidence that those earning the dividends know best what to do with the money they've earned by risking their own capital investing.

Now if only the folks in DC were so concerned about the welfare of the taxpayer


Plus one!

People get what they vote for.

Capitalism bad, taxes good!

 

[Turk]

Bring 'em!

I'm heavy into Dividends, but my income is below 250k, so I should be ok.

 

[thegeneral]

Taxes on dividends are increasing no matter your income. The $250,000 is only on earned income.

 

[SuperDave456]

Taxes increasing on dividends = more reason to invest overseas

 

[Donald]

Originally Posted By: gathermewool
I've been debating moving a 20-40% chunk of my 401(k) into fixed at the end of the year, until this whole thing has blown over. It would be nice to be right for once, and time it nicely to dump it all back in for the subsequent up-hill climb (maybe...)


I would not. Unless you are Kreskin, no one can time the market. The people who stayed cool and left their money in stock funds over the 2008 recession are now better off than those who tried to manage the risk.

 

[JimPghPA]

Bears make money, and Bulls make money, but Pigs get slaughtered.

 

[Hermann]

Originally Posted By: JimPghPA
Bears make money, and Bulls make money, but Pigs get slaughtered.


You watch Cramer

 

[PandaBear]

Originally Posted By: javacontour
Good on them. I have confidence that those earning the dividends know best what to do with the money they've earned by risking their own capital investing.


You bet they know what to do with them, most of the stocks are held by capital groups, retirement funds, investment banks, and super wealthy individuals.

Small portion of them are actually owned by individual lower to mid-high income individuals and contribute to large portion of their income. Make sense to distribute them early if it doesn't affect business operations, and perfectly legal.

It is the end of 15% long term capital gain tax rate that should concern them, not the dividend income tax rate.

 

[Turk]

Originally Posted By: Hermann
Originally Posted By: JimPghPA
Bears make money, and Bulls make money, but Pigs get slaughtered.


You watch Cramer


Then, so do you.

 

[Turk]

Yes, div. income will have tax increases. It's still easy money. We'll find out the rules & go from there.

 

[rshaw125]

Bad for the economy. They tried the higher tax route in Europe.The UK is headed for a triple dip recession. They talk austerity but their still borrowing and still spending. France is even worse off.

 

[Drew99GT]

Originally Posted By: Donald
Originally Posted By: gathermewool
I've been debating moving a 20-40% chunk of my 401(k) into fixed at the end of the year, until this whole thing has blown over. It would be nice to be right for once, and time it nicely to dump it all back in for the subsequent up-hill climb (maybe...)


I would not. Unless you are Kreskin, no one can time the market. The people who stayed cool and left their money in stock funds over the 2008 recession are now better off than those who tried to manage the risk.


The money people kept in the market through the crash in 2008 and 2000 is way under water in inflation adjusted terms. No one can time perfectly tops and bottoms, but prudent investors who learn market analysis and actually objectively follow the markets can certainly do better then buy and hold, as the markets have been in a cyclical bear market since 2000. It takes hundreds of hours of learning, the ability to read charts etc.

A fantastic read on the subject using very simple market analysis to get out of intermediate market corrections during this cyclical bear market is called the IVY portfolio.

http://advisorperspectives.com/dshort/updates/Ivy-Portfolio-in-ETFReplay.php

http://www.theivyportfolio.com/

The IVY advocates analysis on a monthly chart; doing the same on a weekly chart can lower volatility and increase returns even more. It means buying and selling more often and it only works in tax deferred accounts that avoid tax consequences.

 

[gathermewool]

Originally Posted By: Donald
Originally Posted By: gathermewool
I've been debating moving a 20-40% chunk of my 401(k) into fixed at the end of the year, until this whole thing has blown over. It would be nice to be right for once, and time it nicely to dump it all back in for the subsequent up-hill climb (maybe...)


I would not. Unless you are Kreskin, no one can time the market. The people who stayed cool and left their money in stock funds over the 2008 recession are now better off than those who tried to manage the risk.


True enough, but there are definite trends, especially with my company, of which I have roughly 40% of my 401(k) invested. I've always simply left my 401(k) split as-is, but a few coworkers who take advantage of the cyclic nature of our stock price have come out tens of thousands of $ ahead of those who let it sit. They don't always get the buy/sell points correct, but they lose and gain a lot more than the rest of us.

WRT my money invested outside of my 401(k), I usually add a certain amount per paycheck -- which fluxuates, depending on other financial obligations for that month (I.e., I usually leave a little more money in my checking for holiday shopping this time of year) -- but tend to buy in more as stock prices drop. If I hadn't I think I would have netted a loss on my mutual funds over the past 4 years instead of being 8% up. 8% over 4 years isn't very good (over 4 years,) but ok, considering the initial losses in '08 and '09.