1Semana·

Question to the community - Dividend

Hello everyone,

I follow the dividend strategy with the majority of my portfolio. The issue of taxes on dividends hurts considerably.

As I don't intend to spend the money or my investments, I thought I would invest in stocks such as $O (-0,34 %) or $VZ (-0,54 %) from my portfolio and buy them back from my child. I'm in the red anyway. However, I could use the children's tax-free allowance to avoid taxes. There is withholding tax, of course, but at least it's 12% less.

Does this make sense from your point of view, i.e. does my logic make sense? To be honest, I'm afraid of selling a security and then buying it again straight away. The price of REITs does not fluctuate very much.

I look forward to your suggestions and experiences. Thank you very much.

13 Comentarios

geht-nicht-weil@geht-nicht

1Semana

Why hold the high dividend stocks at all if you don't plan to spend the dividends in the foreseeable future? Why not buy something that is more tax-efficient and offers more long-term growth instead?

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Gregg@equityexpert_1326

1Semana

@DoppelSchlechtMinus , why it is true that high dividend paying stocks are not tax efficient, it is also true that high dividend paying companies tend to be more stable, and you can invest those dividends into other stocks further diversifying your portfolio.

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Fabi@fabsch

1Semana

Why don't you simply put a dividend ETF in your child's junior custody account from the proceeds?

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DTA@trade_commander_2498

1Semana

@fabsch So, I would sell my stock at minus and put in a dividend ETF at current highs with my child. Does that make sense?

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CrashBurner@Psychedelic_Sunflower

1Semana

Since you asked for suggestions and experiences: Leave the topic of dividends to one side and realize the advantages of accumulating ETFs. Realize that in case of doubt, dividends reduce your assets due to the immediate tax burden. Unfortunately, there is no such thing as free money. In addition, high dividends are often a sign that the company is no longer growing so strongly, otherwise they would invest the money in company growth. When things are going well, dividends are a zero-sum game.
As far as the psychological effect is concerned, it's a matter of mindset. You have to work on that.

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Tom@Laeuft

1Semana

@Psychedelic_Sunflower You realize that you pay tax on profits no matter when. For dividends when they are paid out, for capital gains when they are sold. So it doesn't matter. The advantage of dividends is that you utilize the tax-free amount of 1000 euros every year.

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CrashBurner@Psychedelic_Sunflower

1Semana

@Laeuft That is not correct. If the profits continue to work for me for 30 years before the tax is due on sale, the tax deferral effect puts me well ahead of a portfolio with distributions. The advance lump sum dampens this effect somewhat, but in years with weak share performance and or low key interest rates, you don't pay any tax at all. On the subject of the tax-free amount: I can sell and buy back a few shares at the end of the year to utilize the amount. So again, no advantage for dividends here. In addition, you (hopefully) don't stop investing as soon as you use up the tax-free amount. Incidentally, this happens more quickly with dividend payers than with the advance lump sum.

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user5ca946a11b6a4278@user5ca946a11b6a4278

1Semana

Yes, I'm being annoying and repeating myself: gold and Bitcoin are tax-free after one year. Think about it.

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Tom@Laeuft

1Semana

@user5ca946a11b6a4278 Yes, you're annoying😎

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Elfuhr@Elfuhr

1Semana

So if you've been investing in the stock market for around 3 years, I have to say that this also motivated me at the beginning to always see the dividends and have a positive return. That motivated me to keep building up my portfolio regularly. But it also motivated me to compare returns and think about what I wanted. I now have a good monthly distribution and let it run and invest in other stocks and ETFs

If you have been on the stock market since 2025 according to your profile, it depends on the amount invested and I would assume that in your case it might be better to switch to the children's portfolio or go into an ETF. In the long term you will notice that the monthly REITs perform rather poorly and sometimes go into the red for a longer period of time.

If you have been investing for a long time, I am very surprised by the three points and I would invest everything in a world etf or a distributing dividend etf for the sweets and moments of happiness.

As an "uninformed person" I am of course not giving any investment advice...

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DTA@trade_commander_2498

1Semana

Because, to be honest, I'm already in this mess.
1) I am very motivated by the regular distributions
2) I don't dare to sell
3) I have no idea what else to invest in. But the most important thing for me is 1.).
That's why I don't want to do without the dividends. That was the reason why I started investing in the first place. Probably rather a bad mindset.

I am building up other positions without dividends in parallel, such as msci World or s&p 500.

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geht-nicht-weil@geht-nicht

1Semana

@trade_commander_2498 You don't necessarily have to do without dividends altogether, but the "dividend snowball" of high dividend stocks does slow down the interest rate effect on wealth accumulation quite considerably.
For example, a $HMWO has significantly more dividend growth than most of the favorite stocks of dividend financiers.
And an inefficient strategy hurts much longer than selling something in the red once.

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Metis@Metis

1Semana

@trade_commander_2498 Then why not a global ETF in distributing form, for example? It may have a low ("starting") dividend, but higher dividend growth over time plus more passive growth in the area of asset accumulation.

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