Is dividend investing actually beneficial?

Something else critically important that was not mentioned are the tax implications of dividend stocks vs more traditional stocks.

With dividend stocks - you owe ordinary income tax on the dividends issued every year.

With traditional stocks - you don’t owe taxes until you sell the stock.

So it really depends on what your goals with the stock/investment are. Having high dividends paid out every year while you’re in the prime of your career in higher tax brackets can have an impact on your tax burden. If you’re just reinvesting those dividends, you get less control over your tax burden.

With non-dividend stocks, you can let those ride in the market, then, when you retire for example and your income is lower, you can withdraw and pay capital gains taxes or be taxed at your now lower marginal income bracket.

/r/investing Thread Parent