Long–term capital gains are profits from the sale of an asset held for more than a year. The long–term capital tax rate is 0%, 15%, or 20% depending on your taxable income and filing status.
A capital gain is essentially what happens when you purchase shares of a stock at one price and sell them at a higher price. This is the profit you make on an investment.
"Again, the rate you pay depends on your filing status and household income."
Trying to manage your tax liabilities on investment income can be a little daunting at first. You want to keep your tax bill at a minimum, when you're receiving dividends or realizing capital gains. It all comes down to strategy and knowing what you own.
With capital gains, there is one tactic you can employ that could potentially minimize what you owe in taxes. It's called "Tax–Loss Harvesting" (See the definitions).
If your new to investing and some of the language and terms used in this book might make you pause a minute, I put a definitions page at the end if you need to check out some terms.
Dividend growth investing is a common form of income investing (THIS IS NOT TRADING). It just focuses on buying what are known as "dividend growth stocks." These are stocks which perform from both an income and a captial gains perspective.
They pay regular dividends and their stock price grows. Can an investor really get rich from dividends? The short answer is “yes”.
However, a few key concepts can help you find excellent dividend stocks for your portfolio. This will lead to surprising wealth for you in the long run.
But if your looking to making a million dollars by the end of NEXT WEEK than this strategy won't fit your investment plan.
In the pages ahead are some of the criteria a dividend growth stock should met for it to yield you the best returns in your investment portfolio.
It's a very good sign when a company raises its dividend year after year, especially when it can continue to do so during recessions and other tough economic times like the COVID–19 pandemic.