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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (124446)	10/11/2002 7:00:35 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 152472

But you have taxable capital gains, so what's the difference? the difference is that the cap gains rate is capped at 20% for long-term gains, whereas dividends are taxed at the person's marginal tax rate (which is apparently the maximum 39% for everybody who complains about dividends on SI). (i should mention an ulterior reason some may have for preferring cap gains is that some have huge cap gain tax loss carryforwards, of which they can only write off like 3K a year against ordinary income, so they are hoping for another cap gains windfall in order to "milk" their carryforwards. i know a number of people who say how much "free" money they have coming to them from this source. but the thinking is so, like, 1999.) however, like i said, Congress can fix this "issue" if it wants to. the other supposed tax advantage to cap gains is that people can take their gains whenever they like, whereas dividends must be taken whenever the co pays them. however, investors are now discovering that taking gains is easier said than done when Darfot comes to town. a third, more interesting and nuanced, reason why some investors (not typically SI folk) don't like dividends is that they reduce opportunities for price discovery. the dividend yield is readily apparent, so an investor knows what they're getting to the extent they can be assured the dividend is secure. when something is readily apparent, there is less opportunity for "mispricing", so less chance for an active investor to add alpha (supposedly). i don't really buy this third argument (though i find it more interesting since it is made by some value investors). to take the particulars/aggregate thing again, while dividend security may be "transparent" when a small number of (relatively financially stable) cos pay dividends, if everybody pays dividends, then things will be just as opaque as ever. meaning that price discovery, to the extent that it exists, should survive a massive increase in the dividend yield.