I just learned that dividends aren't actually extra cash and I don't know how to cope with that revelation.
>>62438672The IRS disagrees
>>62438672Wait, they aren't?
>>62438672Do you mean because they are taxable?
>>62441438>>62441727If a company doesn’t pay dividends, the excess profit accumulates to the treasury and therefore the valuation. You get the same amount of money as unrealized gains, taxed at the long term rate eventually instead of income right now.
>>62441740But value doesn't underpin stock prices, ergot the cash is basically extra cash since the only thing that will pump or dump the stock is how many AI fidget spinners it can produce not how much cash it has. Deboonked
Think of dividend stocks as better earning potential vs keeping your money as cash. And likely safer in the event of an economic downturn
>>62438672Only if you withdraw more cash than you put in that year. Keep it in your account most of the time to reinvest. Mostly a problem if you are a multi millionaire or about to retire.
>>62438672On paper they are not extra money but in practice they are.How so you may ask.That's because that money would usually go to the company's cash and get wasted on some DEI bullshit but instead it go to your pocket.Also it's a nice way to rebalance your portfolio with dividends rather than having to sell.
>>62438672Were they from oil stocks? You should know better than to complain about that.
>>62438672
The alternative is being heavy in tech, never being able to sell for fear of a large tax bill and getting fucked hard when the inevitable correction happens. This way you slowly build the wealth. By retirement time youll pay virtually no tax in your brokerage if you only live off qualified divvys
>>62438672Wait until you learn what stock buybacks are
So SCHD is good, in other words.
dividend growth is a great filter because it automatically rules out dogshit like spacex even if the nasdaq wants to be the NIGGERDAQ
>>62441436>>62438672HOLD STOCKTHEY TAKE AWAY PART OF THE STOCK AND PAY IT BACK TO YOU AS DIVVIESIRS SHOWS UP AND DEMANDS A CUT
>>62438672>company runs out of ideas>here's some money, don't leave>IRS exists>the company that ran out of ideas now creates taxable events for you>somehow people still fall for it
>get paid a dividend, rent, bond interest, etc>immediately lose ~30% to taxThis is why value investors always lose
