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Strategies & Market Trends : Dividend Investing
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To: Bill J. Landis who wrote (31)2/10/1999 8:52:00 PM
From: Paul Senior  Read Replies (2) of 387
 
I'll argue with the conventional wisdom; namely, I put growth stocks in tax deferred account and div. payers in taxable account.

1. With REITs, part of the dividend is return of capital. If you have it in IRA, you'll pay taxes on such when/if you withdraw such funds. But of course, you won't pay any taxes if it were in the taxable account (i.e. no taxes on the return of capital amounts.)

2. Sir! Do you know how hard it is to keep a growth stock for ten years??? Tons of people can't even keep a spouse for 10 years, let alone a stock. Putting growth component in IRA lets you switch from a growth stock that becomes overvalued, to a better growth prospect. Can do it anytime without having to worry about paying taxes.

3. I find very little difficulty keeping track for taxes of div. in a taxable account. Stocks kept with broker... get year-end statement with total div's; pretty easy to adjust each stock for any cap gains return or foreign investment tax credit.

Other issues also important. I'm no expert or in any way qualified -- just stating what I do. Age, income bracket, asset allocation preferences, goals -- these factors all play a part. And probably the way one deals with dividend payers vs. growth stocks changes over one's life as the factors change and increase or decrease in importance. JMO. Paul Senior
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