Dividend Investors Stop Worrying About The Fiscal Cliff

We’re all sick to death of the term “fiscal cliff” already, but we still face six more weeks of it, and all sorts of companies and investors have clearly started to make big decisions based on expectations of how it might play out. The lead story in today’s Wall Street Journal details how the nation’s biggest companies are scaling back spending plans, anticipating a post-cliff economic slump. Wal-Mart Stores (WMT) on Monday moved up its next dividend by a few days so it falls in 2012 rather than in 2013, when investors would likely have to pay a higher dividend tax rate.

Matthew Craft of the Associated Press is out with a story outlining how changes in tax policy over the years have had little impact on dividend stocks, quoting several investors who expect a similar result in 2013: “Historically, big changes in taxes just have no effect on dividend stocks,” says James Morrow, a fund manager at Fidelity Investments. “And our view is that you should lean on history.”…For millions of Americans, a dividend tax increase won’t matter. Stocks in most individual retirement accounts and 401(k)s will be unaffected until years from now, when the account holders cash them in.

Source: Baron's

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