Lootman wrote:A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
Surely you must be aware that most people stick their HYP shares in ISAs?
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Lootman wrote:A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
Lootman wrote:88V8 wrote:One's tolerance of higher yields also depends on one's age. It takes a long time for a rising divi with a 4% start to cumulatively overtake a 6% static.
V8
If you need the income then that makes sense. However many older folks may have too much money (insofar as that is possible). In which case their primary concern may be the minimisation of taxation.
A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
As it happens I was looking yesterday at my holding of every HYPer's favourite non-yielding share: Berkshire Hathaway. I bought 100 shares some 15-20 years ago for about $10,000 (which was say £6,000 at the time). It has quadrupled since then with a current value of about $40,000 (£32,000 at current FX).
So I have gone from 6K to 32K with not a penny of tax. And ironically much of that is due to BRK collecting dividends but not paying them out.
Of course IHT could take 40% of it in the end, but at least for now this old codger runs a LYP.
MrFoolish wrote:Lootman wrote:A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
Surely you must be aware that most people stick their HYP shares in ISAs?
Charlottesquare wrote:vand wrote:I'm sure that if you filter FTSE 350 on:
6%+ forward dividend yield
5yrs+ rising dividend payouts
you will get a lot of companies that meet that criteria.
Whether or not any randomnly selected 15 of those will continue to grow their dividend payout or - most importantly - delivery a reasonable total return - over the next 5-10 years and beyond, of course no one can be sure, but there are no guarantees when it comes to the markets for a HYP or any other strategy, so if you are going to be a stock picker then pick your poison and take your chances!
Not sure that with target 6% or higher initial yield I would be that comfortable that dividends would continue to rise, for one thing markets are certainly likely not predicting same given initial yield is already at 6% or higher.
MrFoolish wrote:Lootman wrote:A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
Surely you must be aware that most people stick their HYP shares in ISAs?
Arborbridge wrote:Lootman wrote:If you need the income then that makes sense. However many older folks may have too much money (insofar as that is possible). In which case their primary concern may be the minimisation of taxation.
A high level of income is taxed, but a high level of growth is not, at least not until sold and then not at all via CGT if you pop your clogs before then.
One might say "what a waste". What has that investment achieved for you or anyone else? Yes, I know it's certainly nice to have (and I applaud your farsighted investment) but unless you are going to use it, what's it for? It's dead money which either is there for security (yes, that would be a valid reason) or to pass on - but unless you create an income from it, isn't it all a bit pointless?
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