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Dividend Generating Stocks

  • 14-06-2021 1:03pm
    #1
    Registered Users Posts: 3,689 ✭✭✭ 3DataModem


    I have come to own a chunk of an unlisted stock that is paying good dividends right now, but is in a high risk business. Plenty of upside risk but plenty of downside risk too.

    To mitigate the risk I'm planning in gradually diversifying some of the capital away from this particular stock but would like to get some dividend income. Looking to maintain this strategy for a 10+ year horizon, hence I can take a medium amount of risk.

    Is it basically about grabbing some dividend kings / aristocrats (or their non-US equivalents) and off I go?


Comments

  • Registered Users Posts: 5,440 ✭✭✭ daheff


    just remember you pay CGT @33% on share price increases whereas you pay Income tax rates on dividends.


    so if you are on the higher band its preferable for shares that don't distribute.


  • Registered Users Posts: 850 ✭✭✭ bcklschaps


    3DataModem wrote: »
    I have come to own a chunk of an unlisted stock that is paying good dividends right now, but is in a high risk business. Plenty of upside risk but plenty of downside risk too.

    To mitigate the risk I'm planning in gradually diversifying some of the capital away from this particular stock but would like to get some dividend income. Looking to maintain this strategy for a 10+ year horizon, hence I can take a medium amount of risk.

    Is it basically about grabbing some dividend kings / aristocrats (or their non-US equivalents) and off I go?

    I actively seek out high dividend yielding stocks especially stocks that might have a possibility of SP appreciation too. These as you can imagine are hard to find.

    Most high yield stocks are mature companies in mature industries where there little or no growth....and in fact the opposite.

    But just to start off the discussion here....two stocks that I have bought in the last couple of weeks which have good dividends and also reasonable growth prospects

    $IBM - yield 4%
    €AXA insurance - yield 6%


  • Registered Users Posts: 2,240 ✭✭✭ garrettod


    bcklschaps wrote: »
    I actively seek out high dividend yielding stocks especially stocks that might have a possibility of SP appreciation too. These as you can imagine are hard to find.

    Most high yield stocks are mature companies in mature industries where there little or no growth....and in fact the opposite.

    But just to start off the discussion here....two stocks that I have bought in the last couple of weeks which have good dividends and also reasonable growth prospects

    $IBM - yield 4%
    €AXA insurance - yield 6%

    Not to take away from the decent yield, but IBM has been a bit of a dog, and I don't see it changing, so you could end up losing more capital than you gain on dividends. They spent big money on Red Hat, but I'm not sure how well its paid off.

    Thanks,

    G.



  • Registered Users Posts: 10,775 ✭✭✭✭ B.A._Baracus


    daheff wrote: »
    just remember you pay CGT @33%; on share price increases whereas you pay Income tax rates on dividends.


    so if you are on the higher band its preferable for shares that don't distribute.

    I am new to all this stock trading so just wondering, so say I buy 10 Disney stocks (each stock is worth 147.64 euro at the moment of writing but let's say €150 for each to keep the maths simple so €1,500 for 10)
    In 6 months Disney stock becomes €200 a share for example. I would have to pay 33% on each stock €50 euro profit? (which would be €16.50 each)

    ... is this just when I go to sell or something I have to declare each year as I hold on to them?


    It's probably a stupid question but am only learning this :p


  • Registered Users Posts: 2,217 ✭✭✭ robman60


    I am new to all this stock trading so just wondering, so say I buy 10 Disney stocks (each stock is worth 147.64 euro at the moment of writing but let's say €150 for each to keep the maths simple so €1,500 for 10)
    In 6 months Disney stock becomes €200 a share for example. I would have to pay 33% on each stock €50 euro profit? (which would be €16.50 each)

    ... is this just when I go to sell or something I have to declare each year as I hold on to them?


    It's probably a stupid question but am only learning this :p

    On shares you only have to declare when you sell unless you have ETFs but I won't go into that.

    You would have to declare the €500 gain but you have an annual CGT allowance of €1270. You pay the 33% on gains above that amount in a given year.


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  • Registered Users Posts: 10,775 ✭✭✭✭ B.A._Baracus


    thanks for getting back robman!
    So CGT on when I sell and CGT on any profits I make that year (but only paying if my over-all profits go over €1270 euro)

    Ok to ask another question tho? :p
    Say you are amassing a collection of stocks between now and for when you retire. Basically I have to pay CGT on whatever gains the stock made in price even tho I havent sold any?

    Your investment is costing you money, of course while increasing in value, but could easily tank and you've paid tax on then worthless stocks? ... the risk I guess.


    sorry just trying to wrap my head around things :p
    I know these are stupid questions lol.


  • Registered Users Posts: 2,217 ✭✭✭ robman60


    thanks for getting back robman!
    So CGT on when I sell and CGT on any profits I make that year (but only paying if my over-all profits go over €1270 euro)

    Ok to ask another question tho? :p
    Say you are amassing a collection of stocks between now and for when you retire. Basically I have to pay CGT on whatever gains the stock made in price even tho I havent sold any?

    Your investment is costing you money, of course while increasing in value, but could easily tank and you've paid tax on then worthless stocks? ... the risk I guess.


    sorry just trying to wrap my head around things :p
    I know these are stupid questions lol.

    No. You only pay CGT when you sell. There is a different rule for ETFs but the general rule is as I said. If you bought now and had €10,270 in gains in 10 years, you would pay no tax in all the years up to that point and when you sell you would pay tax on the €9,000 above your annual allowance.

    Can be wise to sell some stocks and crystallise some gains before that to use up your annual CG allowance, though.


  • Registered Users Posts: 10,775 ✭✭✭✭ B.A._Baracus


    robman60 wrote: »
    No. You only pay CGT when you sell. There is a different rule for ETFs but the general rule is as I said. If you bought now and had €10,270 in gains in 10 years, you would pay no tax in all the years up to that point and when you sell you would pay tax on the €9,000 above your annual allowance.

    Can be wise to sell some stocks and crystallise some gains before that to use up your annual CG allowance, though.

    Ah I get you :D
    Thanks for getting back to me again. I know these were stupid questions.

    I just watched something on youtube about what you were saying about using your CG allowance too. Pretty smart!
    Just so I got it right it works like this: Say I buy 5 disney stocks at 200 euro each. After two months they shoot up to 400 euro each and say stay at that price for the next 5 years. If I go sell them in 5 years time I will have to pay 33% on that 1000 euro profit (5 x 200 profit) UNLESS ... if I sold 3 stocks at 400 euro this year, used my CG allowance of 1270, i could then buy the stocks back the very next day in which I am resetting things (for a lack of a better term) as I bought stocks at 400 euro price. Right? :p


    **edit**
    I was reading you have to wait up to 30 days if you sell and want to re-buy


  • Registered Users Posts: 2,991 ✭✭✭ Taylor365


    Ah I get you :D
    Thanks for getting back to me again. I know these were stupid questions.

    I just watched something on youtube about what you were saying about using your CG allowance too. Pretty smart!
    Just so I got it right it works like this: Say I buy 5 disney stocks at 200 euro each. After two months they shoot up to 400 euro each and say stay at that price for the next 5 years. If I go sell them in 5 years time I will have to pay 33% on that 1000 euro profit (5 x 200 profit) UNLESS ... if I sold 3 stocks at 400 euro this year, used my CG allowance of 1270, i could then buy the stocks back the very next day in which I am resetting things (for a lack of a better term) as I bought stocks at 400 euro price. Right? :p


    **edit**
    I was reading you have to wait up to 30 days if you sell and want to re-buy
    Take profit every year up to 1270. No tax to pay, but you must file. (Form cg1)


    You can sell and rebuy to harvest a gain.
    You can NOT sell and rebuy to harvest a loss. You must wait 30 days before buying again (called bed and breakfast rule).


    Good few posts on this already, don't know why there isn't a sticky as these rules don't change!


    Treat the 1270 as extra income per year, just try not to sell profit over it as then you'll owe some tax.


    Currently, i'll owe about 200 euro this year, unless the year takes a dive and i sell a stinker for a loss - which i won't be able to rebuy for 30 odd days.


  • Registered Users Posts: 1,882 ✭✭✭ Smee_Again


    Taylor365 wrote: »
    Take profit every year up to 1270. No tax to pay, but you must file. (Form cg1)


    You can sell and rebuy to harvest a gain.
    You can NOT sell and rebuy to harvest a loss. You must wait 30 days before buying again (called bed and breakfast rule).


    Good few posts on this already, don't know why there isn't a sticky as these rules don't change!


    Treat the 1270 as extra income per year, just try not to sell profit over it as then you'll owe some tax.


    Currently, i'll owe about 200 euro this year, unless the year takes a dive and i sell a stinker for a loss - which i won't be able to rebuy for 30 odd days.

    If selling to realise a gain do you have to wait the 30 days before rebuying?


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  • Registered Users Posts: 2,991 ✭✭✭ Taylor365


    Smee_Again wrote: »
    If selling to realise a gain do you have to wait the 30 days before rebuying?
    No. No benefit, other than locking in your allowance.


    Where as harvesting losses could be done to avoid paying tax.


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