When Should I Reinvest Dividends?

Have you ever wondered if you should reinvest dividends or take them in cash and decide where to invest the money yourself? After all, a downside of reinvesting dividends in a bull market is reinvesting automatically at higher stock prices. Perhaps it makes more sense to take cash dividends and invest them only in undervalued stocks. On the other hand, reinvesting dividends allows investors to purchase fractional shares, and sometimes companies with dividend reinvestment programs offer a discount on their shares. While reinvesting dividends through a dividend reinvestment plan, or DRIP, can be great, it's not always appropriate for everyone. Let's take a look at when you should (and shouldn't) reinvest your dividends. When It's a Good Idea to Reinvest Dividends [...]

November 27th, 2018|

How Dividend Reinvestments are Taxed

One appeal of long-term dividend growth investing is the ability to increase your share count by reinvesting dividends. As companies continue growing their dividends and the number of shares you own rises, you can achieve exponential income growth over time. Dividend reinvestment plans, or DRIPs, are the easiest way for hands-off investors to execute this simple strategy because they allow your dividends to be paid in partial shares each quarter (or month). However, like with all investment tools, taxes are an important consideration. Let's take a look at what you need to know about DRIP taxes, including ways to minimize how much you'll have to pay to the IRS each year.

November 27th, 2018|

Regulations Weigh on British American Tobacco’s Long-term Prospects

For decades tobacco stocks have been used by conservative dividend investors to generate safe and steadily rising income. Due to the addictive nature of cigarettes, tobacco businesses are generally recession-proof with low stock price volatility, and thus a staple of many retirement portfolios. However, since peaking in early 2018 British American Tobacco's (BTI) share price has plunged over 50%. The stock's severe decline has sent its dividend yield soaring to almost 8%, its highest level in 16 years and nearly double its five-year average yield of 4%. Let's take a look at the drivers behind British American Tobacco's slump and whether the company's dividend could be at risk in the future. Why the Market is Worried About British American Tobacco [...]

November 20th, 2018|

CenturyLink’s Turnaround Efforts Hit a Snag

Investing in CenturyLink (CTL), the struggling regional telecom company, has not gone well for investors over the last few years. Since peaking in late 2014, CenturyLink's stock is down about 55%, and even accounting for its double-digit yield, investors have seen total returns of about -35%. After years of struggling with a declining legacy landline business (see negative sales growth from 2013 through 2016 below), CenturyLink announced a game-changing acquisition. In 2017 the firm bought Level 3 Communications for $34 billion, with hopes of pivoting the company into fast-growing and thriving businesses like fiber optics and enterprise services.

November 16th, 2018|
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