Dividends

>the more you know 

OUTSIDE a tax-advantaged account, a dividend stock will lose out to a growth stock over time because the dividends are taxable as long-term capital gains. This eats into your investment capital, and saps your compounding.

Consider two equivalent stocks -- a growth stock (Stock G) and a high-dividend stock (Stock D) -- both of which yield 10% per year. Stock G earns its 10% by price accumulation alone, and Stock D earns its 10% by paying a 10% cash dividend. You own 1 share of each, and they are both worth $100/share. At the start, therefore, both Stock G and Stock D are worth $100.

At the end of 1 year, Stock G is now worth $110 (10% growth), and Stock D is still worth $100 but has paid you a $10 dividend which you re-invest. Your return on both stocks is the same -- before taxes. After taxes, however, Stock G is still worth $110 (no tax consequences) but Stock D has only returned you $108 because you paid 20% in capital gains taxes on the dividends. (I'm using 20% to keep the math simple in this example, but the principle is the same for any tax rate.) So after one year, Stock G is ahead by $2.

After year two, Stock G is now worth $121 ($110 x 10%), and stock D is worth $108 ($100 original + $8 reinvested) but has paid you a $10.80 dividend, reduced by taxes to $8.64, for a total gain of $116.64. Stock G is now ahead by $4.36

Hopefully you can now see where this is going. Every year the spread between Stock G and Stock D is going to get wider and wider because taxes aren't depleting any of your Stock G capital.

INSIDE a tax-advantaged account, you don't suffer the tax hit when dividends are declared. You get to reinvest the full amount. Therefore, inside a tax-advantaged account, growth and distributions both add EQUALLY to your growth and your compounding. So what you should be focused on is maximizing your overall return (growth PLUS dividends) instead of focusing on one or the other.

, Thats Bait

Your gay You heard me, that's right. Your gay. You're a real homosexual. And this is coming from swagBoyMinecrafter76; the worlds greatest and most intellectual commenter online. And you know what's worse? Last night after teletubbies marathons, I fucked your mom, AND she died. Feels bad? k thx bye. I don't give a shit. See this is because at only the age of 18 I have conquered the human brain. I'm a self driven intellectual born to wreck havoc on your opinions via keyboard stroke. I'm here to fuck you up fag-boy, and there's nothing you can say about it. See now that you're crying lemme just tell you: not only are you gay, but your grammar is shit. That's right. I go to middle school english class, and this gives me the ultimate ability of an english god. So anytime you write some incorrect grammar or miss that, you know, punctuation mark, I'll be sure to point it out for you. And I might even call you a faggot along with it, fag. It doesn't even matter that I'm failing 7th grade, I'm smarter than you because I said so. I don't even try. I don't study for anything. I'm a genius. My frontal lobe isn't even fully developed yet, but I can use big synonyms for normal words, and I can type over 100 words per minute. That's right, I've the word gay so many times that my fingers just fly through the sweaty, cheeto encrusted keys. Not only are you an idiot, but I'm a genius, and when I'm older, I think I'll be the next Albert Einstein. And maybe I'll get a masters degree in quantum physics too. Oh and my dick is a lot bigger than yours. We're talking 9 inches flaccid. Still mad? Cry more kiddo XD. Hit me up on minecraft.net for nudes. I'll be posting Let's Plays uh, all night long baby. EpicMinecraftLoser98 signing out. Quickscope ya later ehahaha.