Should you rethink dividend stocks

With tax rates on dividends expected to go higher next year, financial advisers should start assessing the risk/reward tradeoff of owning dividend-paying U.S. companies, according to a report last week by Howard Silverblatt, senior index analyst at Standard & Poor's index division. Tax cuts on dividends paid by U.S. companies have saved equity investors $275 billion over the last eight years, he reported.

But unless Congress decides this fall to extend the tax cuts, the maximum dividend tax rate will increase next year from 15% for qualified dividends to 39.6%. This tax increase might cause some investors and advisers to rethink their investment strategies, Mr. Silverblatt wrote. “With dividend stocks, it's what you keep, not just what you make,” he said.

Source: InvestmentNews

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