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Despite the recent cuts to the tax on dividends, investors are still wary of the situation
It would be natural for investors to be eager to pocket their savings after the tax rates on dividends were slashed under President Bush’s $350 billion tax cut. Unfortunately, the rules are so complex that experts are sounding an unusual bit of tax-preparation advice for millions of investors this year: Procrastinate.
Starting in 2003, dividends are taxed at either a 5 percent or 15 percent tax rate, depending on your income. Previously, they were taxed like regular income at rates as high as 38.6 percent.
It’s risky to file early because brokerages and mutual fund companies are bracing to mail out millions of corrected year-end 1099 statements by early March. And some tax experts suggest you buy time in hopes that Congress can rush through a technical corrections bill that will fix errors in the law that hurt investors.
This year, 94 companies in the Standard & Poor’s 500 have boosted their dividends and four have started paying them out, S&P says. That’s an increase from last year’s already strong showing when 88 companies through March boosted dividends.
These dividend announcements are a key to the change.
They don’t just like David Hasselhoff
At a time when neither bonds nor stocks seem to promise high-flying returns, German investors have rediscovered the old virtues of companies that at least offer solid dividend payouts.
Walmart announces a rise in their dividends
The world’s largest retailer boosted its quarterly dividend to 15 cents from 13 cents, with the next payable April 4 to stockholders of record March 18.
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