Welcome back, INVESTOR!
Shoutout to reader Cheyne who had a question about taxes and dividends, so that’ll be the subject of this newsletter.
You’re probably itching to get to the latest buys and sells, so it’ll be short.
I’m not a tax professional, this is not financial advice and these are thoughts based on information you can find at Nerdwallet.com
This will apply to taxable accounts because dividends received in a traditional retirement account will be paid at a later date and dividends received in a ROTH will never be taxed.
There is a wrinkle though with MLP (Master Limited Partnership) distributions, but if the annual amount received in a tax-sheltered account is less than $1,000, you don’t need to worry.
So, dividend income is money that you get from owning stocks that pay you a share of their profits.
The government usually taxes this money, but you can avoid paying taxes on some of it if you do a few things:
First, make sure that your dividends are “qualified”.
Qualified dividends are taxed at a lower rate than non-qualified dividends, which are taxed like your regular income.
Second, keep your total income below a certain level.
This includes your salary, interest, dividend income, rental income, and any other money you make.
The level depends on your filing status, such as single or married.
For example, if you are single and your total income is less than $44,625 in 2023, you will pay 0% tax on your qualified dividends.
If your income is higher, you will pay 15% or 20% tax on your qualified dividends, depending on how much higher as shown below.
 Source: NerdWallet.com |
Third, know that deductions like student loan interest and IRA contributions can lower your income.
The more deductions and credits you have, the lower your income will be, and the less tax you will pay on your dividends.
And, in 2024, the income thresholds have increased by 5.4% as shown below.
 Source: NerdWallet.com |
To recap, you can pay $0 on your dividend income if you own the stock for long enough, keep your income low, and use tax breaks.
I’d love to know if you managed to pay 0% tax on your dividend income by hitting reply!
😁Special THANK YOU to the (2) people who responded to the last newsletter!!
Be sure to check out a few of the responses below.
That said, let’s get to the moves made this week. And remember, you can always check out the PORTFOLIOS, the PODCAST, or see what’s cooking on the YouTube channel.
Dividends Received This Week ~$190.50
- Abbvie (ABBV) | $55.80
- Enterprise Prod. Partners (EPD) | $51.50
- Realty Income (O) | $47.20
Main Street Capital (MAIN) | $36.00
Dividends Received Year to Date~
$895.04
Stocks Sold (AVERAGE)
- 15 Duke Energy (DUK) | $92.00
- 2 Warner Bros. Discovery (WBD) | $9.64
Stocks Bought (AVERAGE)
- 3 Realty Income (O) | $51.99
- 1 VICI Properties (VICI) | $29.33
- 3 Johnson & Johnson (JNJ) | $156.75
Notable Ex-Dividends This Week + SSD Score
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- 2/20 Aflac (AFL), 2.52% | 99VS
- 2/20 Target (TGT), 2.94% | 80S
- 2/21 META Platforms (META), 0.42% | 70S
- 2/21 Discover Finan. (DFS), 2.53% | 45BS
- 2/22 RTX Corp. (RTX), 2.59% | 70S
- 2/22 Cummins (CMI), 2.52% | 98VS
- 2/23 Snap-On (SNA), 2.78% | 99VS
🎙️Podcasts You Should Check Out!🎙️
🤑 Mike the Dividend Guy had a VERY informative episode all about pipelines and utilities, plus a few of his favorite picks.
🎧 You all know I’m a fan of Chris Mayers’ investing style, so this recent episode of We Study Billionaires was a great listen – not to mention one of his favorite investments and why he loves long-term compounding.
✍️What You Said!✍️
In last week’s newsletter, I asked if there were any businesses you were worried about.
Ryne said he could see Altria (MO) as a business that is facing societal change that could hurt its future profitability.
Investing Newsletters You Might Like
⭐Ryne Williams writes a free weekly dividend newsletter and creates multiple top-notch YouTube videos every week. This is a community for dividend investors by dividend investors.
🤑Connor Von Ooyen used to build mobile games at Zynga, and became obsessed with the stock market, so he built an AI tool to scour the internet for the best stock market ideas and news and summarize straight to your inbox. Check out The Yellowbrick Road newsletter!
💰Dividend Earner wants to make your money work for you through dividend growth investing and shares all his holdings and trades monthly. Learn from my mistakes and profit from my success by subscribing to his newsletter.
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Random music video I enjoy and you might too!
🎵Me First And The Gimme Gimmes – City Of New Orleans 🎵
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With that being said, have a WONDERFUL week and I’ll see you in the next one.
