 |
|
| Click
on one of the companies above for information |
|
 |
Edward Jones - Robert Nevarez |
 |
 |
 |
|
| Articles
About Financial |
|
|
| Time to Consider Dividend-Paying Stocks? |
| By
Edward Jones |
| In 2003, dividend-paying stocks jumped into the limelight, following passage of legislation that lowered the tax rate on
dividends. If you're thinking of tax-smart investments, should you be considering these dividend producers?
Before tackling that question, let's review what happened this past year. Until the new tax laws were enacted, the dividends
you received from stocks were taxed at your individual tax rate (e.g., the old tax rates of 27%, 30%, 35% or 38.6%). But
now, the tax rate on dividends has been cut to 15%, retroactive to the beginning of 2003. This new, lower rate is effective
until 2009, when dividend taxes are scheduled to revert to your current income tax rate.
Now, let's look at two potential benefits you can get from adding stocks that have a history of paying dividends:
Greater diversification -- If your equity holdings are dominated by growth-oriented companies, you can gain some
important diversification by adding growth-and-income stocks.
Improved portfolio quality -- Stocks that have a history of paying -- and increasing -- dividends are usually well-run
companies, with strong management, good business plans, competitive products and a real concern for shareholders.
These types of high-quality stocks can be a ``plus'' in your portfolio.
While it may be a good idea for you to invest in select dividend-paying stocks, you'll want to be careful about how you pay for
them.
Specifically, think carefully before moving dollars out of fixed-income vehicles, such as bonds and certificates of deposit, into
these stocks.
At first glance, such a move might look great; the income from bonds and CDs is still taxable at your current tax bracket,
which is likely higher than the 15% rate assessed on dividends. But keep in mind that no dividend-paying stock, no matter
how high the quality, will be as safe -- from the standpoint of preservation of principal -- as an investment-grade bond. Stocks
are not fixed-rate investments -- and there's no guarantee that the stocks you buy will distribute dividends. Also, stocks, by
their nature, are subject to market risks, including the potential loss of principal invested. Therefore, if you switch from bonds
to stocks, you will increase your overall level of investment risk.
New opportunities abound?
However you decide to incorporate dividend-paying stocks into your investment plans, you'll find that you have more attractive
choices than you did just a year ago. In the months since the new tax laws have passed, many companies have increased
their dividend payouts -- and other companies have begun paying dividends for the first time.
Your investment professional can help you map a customized strategy for taking advantage of the expanded opportunities
offered by the lower tax rate. So, make the right moves -- your actions can certainly ``pay dividends.''
|
| Copyright
2001, 2002, 2003 © South Bay Business Register, Edward Jones - Robert Nevarez, and Edward Jones. All rights reserved. |
|
|
| General
Disclaimer |
|
SouthBayBusinessRegister.com does not represent or endorse
the accuracy or reliability of any of the information, content or
advertisements (collectively, the "Materials") contained
on, distributed through, or linked, downloaded or accessed from
any of the services contained on this website (the "Service"),
nor the quality of any products, information or other materials
displayed, purchased, or obtained by you as a result of an advertisement
or any other information or offer in or in connection with the Service
(the "Products"). You hereby acknowledge that any reliance
upon any Materials shall be at your sole risk. SouthBayBusinessRegister.com reserves the right, in its sole
discretion and without any obligation, to make improvements to,
or correct any error or omissions in any portion of the Service
or the Materials. THE
SERVICE AND THE MATERIALS ARE PROVIDED BY SouthBayBusinessRegister.com ON AN "AS IS" BASIS,
AND SouthBayBusinessRegister.com EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE SERVICE OR ANY MATERIALS AND PRODUCTS. IN NO EVENT SHALL
SouthBayBusinessRegister.com BE LIABLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER
WITH RESPECT TO THE SERVICE, THE MATERIALS AND THE PRODUCTS.
|
|
|