Description

In this episode of Becoming Work Optional, Matt and Rachael delve into the nuances of dividend investing, discussing both its advantages and tax implications. They break down the concept of dividends, including the distinction between qualified and non-qualified dividends, and explore how stock holding periods influence taxes. The conversation also covers the relationship between dividends and share prices, the limitations of focusing solely on dividends, and the importance of a diversified investment strategy. Matt and Rachael also weigh the merits of dividend investing against capital appreciation and highlight common misconceptions and risks associated with dividend investing.

Key Points Discussed:

1. Understanding Dividends: A dividend is a company's distribution of profits to shareholders. Qualified dividends are taxed at long-term capital gains rates, while non-qualified dividends are taxed as ordinary income.
2. Dividends and Share Prices: Dividends are not 'free money.'
3. Dividend Investing Strategies: Investing in large-cap value companies that pay dividends can limit the investment universe. High dividend yields can be misleading as they may reflect a declining share price rather than a solid investment.
4. Limitations of Dividend Investing: Solely focusing on dividends may provide an incomplete picture of a company's performance. Taxes on dividends can be burdensome. Total return, which includes both price appreciation and dividends, is a more comprehensive measure of investment performance.
5. Dividend Investing vs. Capital Appreciation: Diversification remains crucial, and investment decisions should not be based solely on dividend policies.
6. Risks and Misconceptions: A high dividend yield does not necessarily equate to a good investment and could deplete the portfolio if unsustainable. Dividend stocks can still face significant volatility. Emphasizing total return and maintaining diversification is key to managing risk and achieving overall investment success.

Join Rachael and Matt as they provide practical advice for navigating the complex world of personal finance, helping listeners make informed decisions to secure their financial future.

Rachael

X/Twitter - @camp_wealth

rachaelcampwealth.com

Matt

X/Twitter - @matthew_garasic

unrivaledwm.com

Disclaimer: This podcast provides general information and discussion about finance, investing, and related subjects. The content provided in this podcast is not intended as investment advice and should not be taken as such. Always seek the advice of a professional or conduct your own research before making financial decisions.

Rachael Camp offers advisory Services are offered through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600.

Neither Camp Wealth or Unrivaled Wealth Management are affiliated with the CFD companies or each other.