While the 15% rate applies to most corporate payouts, that's not the case for most real estate investment trust dividends or for bond fund dividends, which are really interest and are taxed at ordinary income rates of up to 35%.
Stock values are derived by discounting dividends, bond values by discounting interest coupon payments.
Each year, I analyze the primary drivers of asset class long-term returns including risk as measured by implied volatility, expected earnings growth based on GDP estimates and foreign business expansion, market implied inflation based on the spread between long-term Treasury Bonds and TIPS, and current cash payouts from interest and dividends on bond and stock indexes.
Levies across securities (on capital gains, on dividends and on bond interest) are going up.
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You are getting paid very little and your bond coupons, unlike stock dividends, will not adjust over time to reflect rising prices.
Stocks with bond-like characteristics (like dividends), defensive names, and largest cap names should perform well.
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If you reinvested dividends paid by a bond ETF or DRIP last year, then you bought new shares.
While payouts from your bond fund may be called "dividends, " they're really interest and don't qualify for the 15% rate.
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The interest on bonds is subject to the directive, for instance, but dividends on shares, bond-like insurance products or income from derivatives are not.
Vicki Bryan of Gimme Credit, a bond-research firm, worries that Vanguard's shopping spree (and dividends to its shareholders) have left it with excessive borrowings.
Viable stocks with rising dividends, just as long as they yield 3 percent or more going in, are bond surrogates for AAA corporates, 10-year, even 30-year Treasuries which yield 2.7 percent, 2 percent and 3.2 percent, respectively.
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