Dividend income is the cash you receive from dividend payments on a stock. Dividend income can add up over the long term and in some cases it can account for a third or more of your long term gains. Not all investors share our high regard for dividend stock investing, especially as a source of retirement income.
That’s because a dividend paying stock’s yearly 2% or 3% or 5% yield barely seems worth mentioning alongside yearly capital gains of 10%, 20% or 30% or more. But dividends are far more reliable than capital gains. A stock that pays a dividend of $1 this year will probably do the same next year. It may even raise it to $1.05. Dividend income also gets favourable tax treatment.
Taxpayers who hold Canadian dividend-paying stocks get an additional bonus. Their dividends are eligible for the dividend tax credit in Canada. This means that dividend income will be taxed at a lower rate than the same amount of interest income (investors in the highest tax bracket pay tax of 23% on dividends, compared to about 50% on interest income-investors in the highest tax bracket pay tax on capital gains at a rate of roughly 25%).
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s titled, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. It’s all in our newly updated report. And it’s yours FREE!
In choosing dividend investing vs value investing, it’s important to recognize that both can lead to favourable returns
To decide between dividend investing vs value investing, investors must first distinguish between the two. The best dividend stocks respond to tough economic times by doing their best to maintain,… Read More
If you want the top stocks to invest in for your portfolio, then look for a history of business success, dividend payments, and capital gains benefits
We think that successful investors should confine their buying mostly, if not entirely, to high-quality stocks. That’s because they… Read More
Discover types of stocks and other investments to keep outside your RRSP—and the types of investments that benefit from an RRSP tax shelter.
Registered retirement savings plans, or RRSPs, are the best-known and most widely used tax shelter in Canada. The tax treatment of RRSPs is… Read More
Canadian capital gains tax is always on the minds of investors even as they deal with market downturns
There are three main forms of investment income in Canada: interest, dividends and capital gains. The government taxes each differently. Here’s a reminder of how smart investors use… Read More
A history of sustainable dividends is one key characteristic of the best dividend paying stocks
Stick to the best paying dividend stocks and you’ll avoid most of the market’s greatest disasters.
As well, one of the best ways to pick a company that cares about its… Read More
Split-share corporations come with inherent drawbacks that can hand investors unexpected and unwelcomed costs sooner than they’d planned
Split-share corporations: they’re just one of the areas in which Pat McKeough’s Inner Circle can get our investment research. Members also get to ask investment questions of Pat… Read More
Use tax-loss selling, or tax-loss harvesting, to offset your taxable capital gains in Canada.
Tax-loss selling (or tax-loss harvesting) occurs when you deliberately sell a security at a loss in order to offset capital gains in Canada. With tax loss selling in Canada, you can then… Read More
Characteristics of the best stocks with dividends typically include long dividend track record, along with market prominence
Stock prices rise and fall. However, the best stocks with dividends like to ratchet their dividends upward over time—holding them steady in a bad year, and raising them in… Read More
What are the key differences between dividend and index investing?
Dividend investing focuses on stocks that pay regular cash distributions to shareholders, while index investing aims to replicate the performance of a broad market index by holding a diversified portfolio of securities.
One big advantage of index… Read More
Will using the ex-dividend date and record date get more dividend returns?
Knowing your ex-dividend date, and record date, will help you get full value from your dividends, but trying to make a quick buck buying and selling around key dividend dates is not worth the… Read More
Learn everything you need to know in '7 Pro Secrets to Value Investing' FREE Special Report from The Successful Investor.
Canadian Value Stocks:
How to Spot Undervalued Stocks
PLUS! Our Top 4 Value Stocks
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What personal information do we collect?
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Changes to this Policy
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