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Strategies & Market Trends : Value Investing
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To: Bob Rudd who wrote (16107)1/8/2003 5:00:04 PM
From: Paul Senior  Read Replies (1) of 78748
 
Hey! Are you trying to tweak us ACAS/ALD stockholders?

:>)

Greenberg's been writing negative stuff on these business development companies for months. He never misses a chance to expound the negative.

It is too early to predict the demise of these high dividend payers just because they might not be providing tax free dividends under the proposed laws. For example, it won't make any difference (I am guessing) to anybody holding ACAS or ALD now in a 401K plan. Because anything coming out of the 401 gets taxed at the person's tax rate at the coming-out time regardless if monies went in tax-free or taxable. So that 11% yield in ACAS is still juicy.

And there's the issue of deductibility of margin interest. Now you can offset margin interest with dividend income. If div. income becomes tax-free to the taxpayer I doubt that the gov't will let such offsets continue. So I'm saying it might be a positive to have stocks like ACAS, ALD in margin accounts. But who can tell yet?
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